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Black Swan Trader bets Reputation on Inflation
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GGniner Offline
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Black Swan Trader bets Reputation on Inflation
http://online.wsj.com/article/SB124519615631521063.html

could've been avoided had Obama came in and slashed spending during hard times instead of the stimulus, IMO....in fairness though the financial crisis causes the Fed to do some major moves.

be interesting to see what happens, last year all the 'experts' were prediciting a Hyper-Inflation Recession led by Commodities, but then the opposite happend(Deflationary Recession) which proved them to not exactly be the self-professed Oracles they claim to be, but now they may be able to see it happen finally, hopefully not.
(This post was last modified: 06-17-2009 09:41 AM by GGniner.)
06-17-2009 09:31 AM
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GGniner Offline
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RE: Black Swan Trader bets Reputation on Inflation
for things to watch for, see this chart:

http://www.optimist123.com/optimist/2009...watch.html

Quote:Inflation Watch

Some people think deficits cause inflation; some don't. I'm in the latter group, because I think inflation is almost always a result of monetary policy, and seldom if ever of fiscal policy.

But whichever it is, the numbers should start swinging one way or the other reasonably soon, given the unprecedented deficits we're running (...and will continue to run for several years). Either deficits will pull away from the low inflation numbers, or the inflation numbers will start rising with the deficits. It might be a good idea to start watching all the key numbers in one place on a regular basis, so here they are:

[Image: 6a00d83451c0c869e201156fb39c09970c-800wi]


The CPI says we're deflating; the other three say we are safely in low-inflation territory.

Another way of saying that: all four indicators say that inflation is not a problem yet. Neither the deficits we have, nor the deficits we know are coming, nor the trillion dollars the Fed has "printed up" are causing any inflation so far. Why? In my judgment, deficits don't cause inflation, so that narrows the mystery down to all that money the Fed printed up. Reason that's not causing inflation yet is because almost all of it is just sitting there, in "excess reserves" in the banking system. (If the Fed printed up a *hundred* trillion dollars and set it down in an inaccessible nook at the bottom of the Grand Canyon, that wouldn't be inflationary either.)

So here's this week's conclusion:

Nothing but a low, safe inflation level so far. If the high-inflation demon is out there, it's still hiding just around the next corner, as it has been for the several decades I've been paying attention. ============

End note regarding the four inflation indicators I picked:
My two personal favorites are the so-called TIPS spread, and the "trimmed-mean" PCE. The TIPS spread is the worldwide bond market's daily judgment on inflation, and the most popular "spread" is the difference between the interest rate on 10-year Treasury notes and the rate on 10-year Treasury inflation-protected securities. The trimmed-mean PCE is the Dallas Fed's massaging of the components in the personal consumption expenditures numbers, and it's a second cousin of "core" PCE.

The Consumer Price Index (CPI) is a must have because it's always in the headlines. The GDP deflator is a bit more comprehensive than the others, but it's also more delayed (...it's more of a rear-view-mirror indicator).

Here are the links to the sources:

Trimmed-mean PCE

TIPS spread components:
10-year T-Notes, daily
10-year TIPS, daily

CPI-U

GDP deflator

that was a few weeks back, not sure his take
06-17-2009 09:35 AM
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DrTorch Offline
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RE: Black Swan Trader bets Reputation on Inflation
Quote:In my judgment, deficits don't cause inflation, so that narrows the mystery down to all that money the Fed printed up. Reason that's not causing inflation yet is because almost all of it is just sitting there, in "excess reserves" in the banking system.

Isn't this THE connection between fiscal and monetary policies? Isn't this the essentially saying that deficits DO cause inflation, when they're tied to a monetary policy that churns out excess money?
06-17-2009 09:43 AM
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GGniner Offline
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RE: Black Swan Trader bets Reputation on Inflation
(06-17-2009 09:43 AM)DrTorch Wrote:  
Quote:In my judgment, deficits don't cause inflation, so that narrows the mystery down to all that money the Fed printed up. Reason that's not causing inflation yet is because almost all of it is just sitting there, in "excess reserves" in the banking system.

Isn't this THE connection between fiscal and monetary policies? Isn't this the essentially saying that deficits DO cause inflation, when they're tied to a monetary policy that churns out excess money?

first this guy is a "SKeptical Optimist", he is also an ex-Executive for a Fortune 50 company, basically of the Club for Growth mindset(to him Pro-Growth policies are by far the most important thing and the Fed isn't Satan). jack kemp read that blog for example. Good to read, IMO, to counterbalance the Ivory Tower Libertarian economic blogs.

He's got several post on his site on that subject I think, one directly against Glenn Beck who he dislikes. Also a good one exposing David Walker, who he thinks is profiteering.

I know he would say Deficits are fine, in a Growing Economy. Key there is a Growing Economy, which I think is the premise of his statement. Not sure he's factoring in, crazy Obama type spending or not into his reasoning.


Anyway, here is some interesting reading from him, which explains where he's coming from more:

Do Deficits cause inflation?

and my personal favorite:

Deficits don't matter, Entrepeneuers do

short version is while focusing on the Deficit is useful for political debate in the world of Double Entry Accounting and Financial Analysis its alot more complex question. Key being Economic growth and pro-Entreprenuer policies, those things stop we are up a creek fiscally.
06-17-2009 10:16 AM
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DrTorch Offline
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RE: Black Swan Trader bets Reputation on Inflation
(06-17-2009 10:16 AM)GGniner Wrote:  short version is while focusing on the Deficit is useful for political debate in the world of Double Entry Accounting and Financial Analysis its alot more complex question. Key being Economic growth and pro-Entreprenuer policies, those things stop we are up a creek fiscally.

I agree with that final statement. And that extends well beyond financial policy, although that's plenty complicated w/ fed and local income taxes, payroll taxes, capital gains taxes, property taxes, transportation taxes.

It includes the regulatory environment, EPA, OSHA, FHA, DOC, etc, reporting requirements, as well as hiring regulations...which all tie in to the deficit b/c you pay these people and their overhead costs.

A frickin' nightmare IMO.
06-17-2009 10:54 AM
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Artifice Offline
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RE: Black Swan Trader bets Reputation on Inflation
Gas prices are back on the uptick. Inflation is returning. It permeates everything. The CPI trend will reverse quickly in the coming quarters.
06-17-2009 11:12 AM
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RobertN Offline
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RE: Black Swan Trader bets Reputation on Inflation
(06-17-2009 11:12 AM)Artifice Wrote:  Gas prices are back on the uptick. Inflation is returning. It permeates everything. The CPI trend will reverse quickly in the coming quarters.
True. But it is because of speculation(again) and the oil companies cut gas production from refineries.
06-17-2009 11:25 AM
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DrTorch Offline
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RE: Black Swan Trader bets Reputation on Inflation
(06-17-2009 11:25 AM)RobertN Wrote:  
(06-17-2009 11:12 AM)Artifice Wrote:  Gas prices are back on the uptick. Inflation is returning. It permeates everything. The CPI trend will reverse quickly in the coming quarters.
True. But it is because of speculation(again) and the oil companies cut gas production from refineries.

Coyoteblog Wrote:We all know the problem with oil companies: They restrict supply to drive up prices to earn profit margins that are nearly a third of those earned by Microsoft while simultaneously keeping prices too low and promoting addiction to oil which produces a lot of CO2 and they never want to reinvest their profits in exploring for new oil so the government needs to restrict drilling in every major prospective US region so the oil companies will be stopped from greedily drilling everywhere and destroying the environment.
(This post was last modified: 06-17-2009 12:35 PM by DrTorch.)
06-17-2009 12:35 PM
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Artifice Offline
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RE: Black Swan Trader bets Reputation on Inflation
The speculative market is completely unregulated, thanks in no small part to guys like Phil Gramm.
06-17-2009 01:16 PM
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