Comments on Adam Hamilton's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/adam-hamilton/articles http://seekingalpha.com/article/116297/comments?source=feed#comment-810854 810854 According to Adam, a steady availability of commodities & rise >in money supply brings inflation. OK, and that clearly is a supply- >demand event. But now, hold money supply steady and reduce >available of commodities. That causes prices to rise just as >certainly and that again is a supply-demand event. But this Adam >refuses to call inflation. (The second situation is basically the >example Adam gives re the Texas oil town boom in housing >prices -- money supply holds steady and demand for limited >commodities increases.) It all is inflation, whether you look at it >from the money or the goods end. The result is exactly the same >– your money is worth less because it is able to buy less. ]]> Thu, 17 Dec 2009 12:26:59 -0500 I cannot think of any other cause of *all* prices to rise except the rise in money supply.
Milton Friedman: "Inflation is where the aggregate level of prices goes up and deflation where the aggregate level of prices goes down" [aggregate is crucial here] "Inflation does not occur because of a "wage-price spiral," an "overheated" economy, excessive economic growth, or through any other natural mechanism of the market. A government debasing the currency would not have fooled anyone a century ago. Now, through deception, a government can try to blame inflation on anything but its own irresponsible actions. "

What makes reality so complex that even in a money-inflation scenario, where prices of all goods and services should rise, some prices will actually do sink, for example flat screen television sets, purely because of improvement in the production process. But without inflation these televison sets would have been even cheaper, but that is not easy to demonstrate.


@SunrdrJuris:
>According to Adam, a steady availability of commodities & rise
>in money supply brings inflation. OK, and that clearly is a supply-
>demand event. But now, hold money supply steady and reduce
>available of commodities. That causes prices to rise just as
>certainly and that again is a supply-demand event. But this Adam
>refuses to call inflation. (The second situation is basically the
>example Adam gives re the Texas oil town boom in housing
>prices -- money supply holds steady and demand for limited
>commodities increases.) It all is inflation, whether you look at it
>from the money or the goods end. The result is exactly the same
>– your money is worth less because it is able to buy less.


]]> http://seekingalpha.com/article/128314/comments?source=feed#comment-452493 452493 Sun, 05 Apr 2009 13:01:10 -0400 http://seekingalpha.com/article/128314/comments?source=feed#comment-444548 444548 Sun, 29 Mar 2009 20:18:52 -0400 ]]> http://seekingalpha.com/article/128314/comments?source=feed#comment-444321 444321 Sun, 29 Mar 2009 14:56:42 -0400 http://seekingalpha.com/article/128314/comments?source=feed#comment-444318 444318 Sun, 29 Mar 2009 14:53:56 -0400 http://seekingalpha.com/article/116297/comments?source=feed#comment-376565 376565 Thu, 05 Feb 2009 07:42:36 -0500 http://seekingalpha.com/article/116297/comments?source=feed#comment-376513 376513 making many heads roll, no real change will take place and the true end of this mess will be nothing less than the destruction of America. No amount of economic theorizing can pick up the slack created by entrenched & institutionalized thievery with even government bodies (governed by corporate cronies), such as the SEC, in full collusion. That fact alone means no real change will take place. The system is broken and the rotten fruitage of our Gordon Gekko- minded elite will have to be eaten by all levels of society. Stimulus checks and tax rebates only buy time for these elitists to run for cover before the roof falls in.ciety. Stimulus checks and tax rebates only buy time for these elitists to grab their bonuses and run for cover before the roof falls in.]]> Thu, 05 Feb 2009 06:21:44 -0500 making many heads roll, no real change will take place and the true end of this mess will be nothing less than the destruction of America. No amount of economic theorizing can pick up the slack created by entrenched & institutionalized thievery with even government bodies (governed by corporate cronies), such as the SEC, in full collusion. That fact alone means no real change will take place.

The system is broken and the rotten fruitage of our Gordon Gekko- minded elite will have to be eaten by all levels of society. Stimulus checks and tax rebates only buy time for these elitists to run for cover before the roof falls in.ciety. Stimulus checks and tax rebates only buy time for these elitists to grab their bonuses and run for cover before the roof falls in.]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-372726 372726 Sun, 01 Feb 2009 17:18:49 -0500
"EVIDENCE THAT BIG INFLATION IS COMING"

The real “inflation” here is in the gross exaggeration of the M0 DATA that this hack is presenting.

Want proof (that you can actually verify)?

His chart suggests that M0 is ~ 1.67T.

The Fed PUBLISHED M1 number for December 08 was 1.624T

Look at the tables here: www.federalreserve.gov.../

Now we know it is IMPOSSIBLE to have an M0 number higher than M1 (which is what this article suggests). Ah, your first sign that something is not right.

So next we look at table 3 (on the same page) "Components of M1"

Well, we see that paper currency is up 55b Dec 07 - Dec 08. An unamazing 7.2% increase over 12 months (avg. currency supply increases about 6% per year).

Then we see that Travelers Checks are down .8b (maybe people are traveling less). Funny, yes?

Ready for the BIG one?
Then we see that checking accounts (Demand Deposits) are up 173b. Basically this number is the reserve that the banks are actually holding. Typically this is between 305-370b (despite averaging slightly being 300 during 2008). The banks take your checking account money, send chunks of it back out into the economy (keeping these reserves just in case somebody actually writes a check). When you hear about a "run on the banks" - this is the number that gets hit. So what we have here is that banks are holding more reserves (keeping money OUT of the economy). Funny thing here is that this COULD be considered Deflationary.

BUT WHY???

No, people are not saving more.

The Fed has recently started paying (interest) banks to hold these reserves when held at central banks (saying, “hey, don't lend”). Yes, it runs counter to the goal of getting money into the economy but the gov't sometimes sends mixed messages.

Then we have Other Checkables (NOW accounts & Money Markets) are up 5b - not significant.

Oh, and by the way – if you take out the increase in reserves, you will see that, over the last 5 years, we’ve had a remarkably boring M1 number (up about 100b) – yes, all the way through December 08.

Now, I can’t speak for the motives of this author (he is trying to SELL you a report), but I can say that the numbers are WAY off which really makes his assumptions (based on the numbers) IRRELEVANT.

Maybe he gets his advice from the other lady here that said to buy $DRYS (the biggest turd stock of the decade).





]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-371602 371602 Fri, 30 Jan 2009 18:57:10 -0500 http://seekingalpha.com/article/116297/comments?source=feed#comment-370569 370569 Thu, 29 Jan 2009 21:38:08 -0500 ]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-370504 370504 Mild deflation, We are here now.) 9. Further and further falling prices of goods (=> Hyperdeflation) 10. Prices of goods turning to negative (= Hyperinflation) Mounting job losses and falling real estate price are the results of depleted money supply in the market. ]]> Thu, 29 Jan 2009 19:54:57 -0500
1. Steep interest rate decrease (9/11 terror)
2. Historic collateral value inflation
3. Historic credit inflation (Money supply to market increased.)
4. Historic credit defaults
5. Historic credit deflation (Money supply to market decreases.)
6. Scarce dollars in the market (Dollars got stronger ever.)
8. Falling prices of goods (=> Mild deflation, We are here now.)
9. Further and further falling prices of goods (=> Hyperdeflation)
10. Prices of goods turning to negative (= Hyperinflation)

Mounting job losses and falling real estate price are the results of depleted money supply in the market.

]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369498 369498 From Mish, http://globaleconomicanalysis.blogspot.com/2009/01/is-big-inflation-coming.html > > > > Adam Hamilton at Zeal is predicting Big Inflation Coming. > > The growing legions of deflationists see an unstoppable depression-like > deflationary spiral approaching like a freight train. They cite some > convincing data. The stock markets have been cut in half in just > a year. In the past 6 months, some key commodities prices fell farther > and faster than they did in the entire Great Depression. House prices > are down by double digits across the nation, with no bottom in sight. > And credit is a lot harder to come by today than in any other time > in modern memory. > > My Comment: Well yes, that is convincing data. Indeed a perfect 15 > out of 15 conditions experienced in the great depression are happening > today as discussed in Humpty Dumpty On Inflation. > > Of course Humpty Dumpty can and does pretend that deflation is specifically > about money supply, totally ignoring credit. And those same Humpty > Dumpties were amazed by the collapse in commodities and were crushed > shorting treasuries because they did not see this coming. > > In light of these universal falling prices, how could we not be entering > a sustained deflationary period? The case may seem airtight, but > I’d like to offer a contrarian view in this essay. Believe it or > not, despite 2008’s price collapse there is plenty of overlooked > evidence suggesting big inflation is coming. You won’t hear much > about this on CNBC, but it could have a big impact on your investments > in the years ahead. > > My Comment: I am not sure what Hamilton means by "sustained". We > have been in deflation for about a year, and maybe it lasts another, > or five. Then again, perhaps we drift in and out of a slow growth > recessionary period much like Japan for a decade. We have to take > this one step at a time. > > Inflation and deflation are purely monetary phenomena. Inflation > is not just a rise in prices, lots of things can drive prices higher. > Inflation is the very specific case of a rise in general price levels > driven by an increasing money supply. > > My Comment: That last sentence puts the cart in front of the horse. > Inflation is not rising prices; rising prices are a result of inflation > (an increase in money supply and credit). > > Acknowledging that debt-financed house prices are a special case > that may indeed be deflationary (contraction of credit), I am focusing > on stocks and commodities in this essay. From October 2007 to November > 2008, the flagship S&P 500 stock index plunged 51.9%. About 4/7ths > of these losses snowballed in just 9 weeks during the stock panic. > From July 2008 to December 2008, the flagship Continuous Commodity > Index plummeted 46.7%. Almost half of this mushroomed during the > stock panic. > > Deflationists argue these price drops are proof of deflation, and > most people today believe this. But they are only deflationary if > they were driven by a contraction in the money supply. Stocks and > commodities are generally cash markets. Credit such as stock margin > can be used, but it is trivial relative to the market sizes. And > real commodities purchased for industrial uses are paid for in cash > or near-cash (short-term trade loans), not multi-decade loans like > houses. So the money supply during 2008’s slides is the key. > > My comment: What deflationist has argued that commodity price declines > are proof of deflation? Can I have a name? Most mainstream media > is concentrating on prices. > > More to the point, no single indicator alone can constitute proof. > However, 15 out of 15 symptoms one might expect to see in deflation > should be ample proof for anyone. > > If available money to spend indeed contracted, then the deflationists > are right about seeing deflation in 2008. But if the money supply > fell by less than stocks and commodities plunged, was flat, or even > grew, then deflationists are wrong. When prices fall simply because > demand declines (too much fear to buy anything immediately), this > is merely supply and demand. If money didn’t drive it, then it isn’t > deflation. > > There is the humpty dumpty argument again. And again I reply that > it is foolish to ignore credit (debt). Debt is actually more important > than money simply because it dwarfs base money. And much of that > debt cannot be paid back and that is why banks are failing. > > Come to think of it, I need to add bank failures to my list. That > makes a perfect 16 out of 16 things. > > The key point in this rebuttal is that money supply does not have > to shrink to cause deflation unless you insist on a humpty dumptyish > definition that has no real world practical application. > > Here is a practical application: There is no money to pay back loans. > What cannot be paid back will be defaulted on and the default avalanche > has been triggered. Once an avalanche starts, it is impossible to > stop. > > That avalanche of defaults amounts to deflation if it exceeds the > expansion of money supply. > > Banks are attempting to hide the avalanche by not marking their books > to market. Citigroup alone is sitting on over $800 billion in SIVs > of dubious value. However pretending credit will be paid back does > not make it so, just as ignoring an avalanche does not stop it.
> > Hamilton goes on and on with straw man arguments about what deflationists > believe. In practice I do not know a single deflationist who believes > the strawman Hamilton is rebutting. > > Hamilton also talks about various money supply charts as if they > are proof of inflation. Here is my rebuttal. > > Base Money % Change From A Year Ago > > > > Hamilton's definition shows there was massive inflation during the > great depression, starting in 1931! > > Of course that is ridiculous. But it is what one must conclude if > one defines inflation as an expansion of money supply alone. > > That chart shows why it is foolish to look at one indicator as proof > of inflation. A more practical approach and a more practical definition, > gives more practical results. > > Soaring base money supply is not proof "Big Inflation Is Coming" > soon, just as it was not proof that "Big Inflation" was coming in > 1931. There cannot possibly be any other logical conclusion when > confronted with the data. > > Mike "Mish" Shedlock > http://globaleconomicanalysis.blogspot.com > Click Here To Scroll Thru My Recent Post List]]> Thu, 29 Jan 2009 01:42:11 -0500

On Jan 25 08:23 AM TMM wrote:

> From Mish, globaleconomicanalysis...
>
>
>
> Adam Hamilton at Zeal is predicting Big Inflation Coming.
>
> The growing legions of deflationists see an unstoppable depression-like
> deflationary spiral approaching like a freight train. They cite some
> convincing data. The stock markets have been cut in half in just
> a year. In the past 6 months, some key commodities prices fell farther
> and faster than they did in the entire Great Depression. House prices
> are down by double digits across the nation, with no bottom in sight.
> And credit is a lot harder to come by today than in any other time
> in modern memory.
>
> My Comment: Well yes, that is convincing data. Indeed a perfect 15
> out of 15 conditions experienced in the great depression are happening
> today as discussed in Humpty Dumpty On Inflation.
>
> Of course Humpty Dumpty can and does pretend that deflation is specifically
> about money supply, totally ignoring credit. And those same Humpty
> Dumpties were amazed by the collapse in commodities and were crushed
> shorting treasuries because they did not see this coming.
>
> In light of these universal falling prices, how could we not be entering
> a sustained deflationary period? The case may seem airtight, but
> I’d like to offer a contrarian view in this essay. Believe it or
> not, despite 2008’s price collapse there is plenty of overlooked
> evidence suggesting big inflation is coming. You won’t hear much
> about this on CNBC, but it could have a big impact on your investments
> in the years ahead.
>
> My Comment: I am not sure what Hamilton means by "sustained". We
> have been in deflation for about a year, and maybe it lasts another,
> or five. Then again, perhaps we drift in and out of a slow growth
> recessionary period much like Japan for a decade. We have to take
> this one step at a time.
>
> Inflation and deflation are purely monetary phenomena. Inflation
> is not just a rise in prices, lots of things can drive prices higher.
> Inflation is the very specific case of a rise in general price levels
> driven by an increasing money supply.
>
> My Comment: That last sentence puts the cart in front of the horse.
> Inflation is not rising prices; rising prices are a result of inflation
> (an increase in money supply and credit).
>
> Acknowledging that debt-financed house prices are a special case
> that may indeed be deflationary (contraction of credit), I am focusing
> on stocks and commodities in this essay. From October 2007 to November
> 2008, the flagship S&P 500 stock index plunged 51.9%. About 4/7ths
> of these losses snowballed in just 9 weeks during the stock panic.
> From July 2008 to December 2008, the flagship Continuous Commodity
> Index plummeted 46.7%. Almost half of this mushroomed during the
> stock panic.
>
> Deflationists argue these price drops are proof of deflation, and
> most people today believe this. But they are only deflationary if
> they were driven by a contraction in the money supply. Stocks and
> commodities are generally cash markets. Credit such as stock margin
> can be used, but it is trivial relative to the market sizes. And
> real commodities purchased for industrial uses are paid for in cash
> or near-cash (short-term trade loans), not multi-decade loans like
> houses. So the money supply during 2008’s slides is the key.
>
> My comment: What deflationist has argued that commodity price declines
> are proof of deflation? Can I have a name? Most mainstream media
> is concentrating on prices.
>
> More to the point, no single indicator alone can constitute proof.
> However, 15 out of 15 symptoms one might expect to see in deflation
> should be ample proof for anyone.
>
> If available money to spend indeed contracted, then the deflationists
> are right about seeing deflation in 2008. But if the money supply
> fell by less than stocks and commodities plunged, was flat, or even
> grew, then deflationists are wrong. When prices fall simply because
> demand declines (too much fear to buy anything immediately), this
> is merely supply and demand. If money didn’t drive it, then it isn’t
> deflation.
>
> There is the humpty dumpty argument again. And again I reply that
> it is foolish to ignore credit (debt). Debt is actually more important
> than money simply because it dwarfs base money. And much of that
> debt cannot be paid back and that is why banks are failing.
>
> Come to think of it, I need to add bank failures to my list. That
> makes a perfect 16 out of 16 things.
>
> The key point in this rebuttal is that money supply does not have
> to shrink to cause deflation unless you insist on a humpty dumptyish
> definition that has no real world practical application.
>
> Here is a practical application: There is no money to pay back loans.
> What cannot be paid back will be defaulted on and the default avalanche
> has been triggered. Once an avalanche starts, it is impossible to
> stop.
>
> That avalanche of defaults amounts to deflation if it exceeds the
> expansion of money supply.
>
> Banks are attempting to hide the avalanche by not marking their books
> to market. Citigroup alone is sitting on over $800 billion in SIVs
> of dubious value. However pretending credit will be paid back does
> not make it so, just as ignoring an avalanche does not stop it.

>
> Hamilton goes on and on with straw man arguments about what deflationists
> believe. In practice I do not know a single deflationist who believes
> the strawman Hamilton is rebutting.
>
> Hamilton also talks about various money supply charts as if they
> are proof of inflation. Here is my rebuttal.
>
> Base Money % Change From A Year Ago
>
>
>
> Hamilton's definition shows there was massive inflation during the
> great depression, starting in 1931!
>
> Of course that is ridiculous. But it is what one must conclude if
> one defines inflation as an expansion of money supply alone.
>
> That chart shows why it is foolish to look at one indicator as proof
> of inflation. A more practical approach and a more practical definition,
> gives more practical results.
>
> Soaring base money supply is not proof "Big Inflation Is Coming"
> soon, just as it was not proof that "Big Inflation" was coming in
> 1931. There cannot possibly be any other logical conclusion when
> confronted with the data.
>
> Mike "Mish" Shedlock
> globaleconomicanalysis...
> Click Here To Scroll Thru My Recent Post List]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369497 369497 1) "M0, the narrowest measure, is usually called the monetary base. > It is simply currency (coins and paper dollars) in circulation and > in bank vaults plus reserves commercial banks have on deposit with > the Fed." > > M0 includes bank deposits at the federal reserve banks. Do you think > any of the trillions of dollars that have exited the derivitives, > stock, bond, and commodities markets were deposited in these accounts? > If some of the growth in M0 and MZM was caused by banks converting > their riskiest assets to cash, is that really the same as money printing? > It looks to me like the government accounts used to keep banks' required > reserves have become the hottest new place for banks to hoard cash > safely! Keep in mind, since the repeal of the Glass Steagal Act > of 1933, the investment banks and the commercial banks with Federal > reserve accounts are one and the same. Most of the TARP funds are > still sitting there. > > 2) "Ride the coming inflationary wave. Some of this deluge of new > money will flow into beaten-down stocks and commodities. I like both > since they were driven to such irrational prices in 2008." > > That's certainly contrarian! You're predicting a currency devaluation > like Argentina, Mexico, or Russia in the 90's and you think stocks > are a good place to hide? Would domestic stocks priced in domestic > currency have been the right investment to make for people in those > countries when their currencies and economies collapsed? No. A > passport and lots of USD would have been best. > > If you are positive that we are about to experience a currency collapse, > the rational thing to do would be to take on as much debt as you > can and convert to another currency (or just buy forex options that > would pay off big). When your home currency collapsed your debts > would be cheap compared to your foreign currency and you'd be left > with much more purchasing power than you started with. > > Regarding commodities, the collapse of an economy the size of the > US would do strange things to supply and demand, so oil could underperform > inflation. As far as precious metals are concerned, portability > and security could be problematic (imagine 50lbs of metal in your > carry-on luggage at the airport as you try to escape the country!). > However a few coins for bribes wouldn't be irrational.]]> Thu, 29 Jan 2009 01:32:07 -0500

On Jan 26 03:48 PM Chris B wrote:

> 1) "M0, the narrowest measure, is usually called the monetary base.
> It is simply currency (coins and paper dollars) in circulation and
> in bank vaults plus reserves commercial banks have on deposit with
> the Fed."
>
> M0 includes bank deposits at the federal reserve banks. Do you think
> any of the trillions of dollars that have exited the derivitives,
> stock, bond, and commodities markets were deposited in these accounts?
> If some of the growth in M0 and MZM was caused by banks converting
> their riskiest assets to cash, is that really the same as money printing?
> It looks to me like the government accounts used to keep banks' required
> reserves have become the hottest new place for banks to hoard cash
> safely! Keep in mind, since the repeal of the Glass Steagal Act
> of 1933, the investment banks and the commercial banks with Federal
> reserve accounts are one and the same. Most of the TARP funds are
> still sitting there.
>
> 2) "Ride the coming inflationary wave. Some of this deluge of new
> money will flow into beaten-down stocks and commodities. I like both
> since they were driven to such irrational prices in 2008."
>
> That's certainly contrarian! You're predicting a currency devaluation
> like Argentina, Mexico, or Russia in the 90's and you think stocks
> are a good place to hide? Would domestic stocks priced in domestic
> currency have been the right investment to make for people in those
> countries when their currencies and economies collapsed? No. A
> passport and lots of USD would have been best.
>
> If you are positive that we are about to experience a currency collapse,
> the rational thing to do would be to take on as much debt as you
> can and convert to another currency (or just buy forex options that
> would pay off big). When your home currency collapsed your debts
> would be cheap compared to your foreign currency and you'd be left
> with much more purchasing power than you started with.
>
> Regarding commodities, the collapse of an economy the size of the
> US would do strange things to supply and demand, so oil could underperform
> inflation. As far as precious metals are concerned, portability
> and security could be problematic (imagine 50lbs of metal in your
> carry-on luggage at the airport as you try to escape the country!).
> However a few coins for bribes wouldn't be irrational.]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369404 369404 Wed, 28 Jan 2009 22:53:30 -0500
Buy all the gold and TBT you can get your hands on and just wait for the slot machine to pay off!!]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369402 369402 Wed, 28 Jan 2009 22:52:35 -0500 http://seekingalpha.com/article/116297/comments?source=feed#comment-369350 369350 I think we have to have some major moves in economic growth before > we have to worry about any significant changes in inflation. > > If you have an opinion, tell me about it at http://www.InvestorPitStop.com]]> Wed, 28 Jan 2009 21:21:32 -0500

On Jan 28 07:13 PM jrs87sch wrote:

> I think we have to have some major moves in economic growth before
> we have to worry about any significant changes in inflation.
>
> If you have an opinion, tell me about it at www.InvestorPitStop.com]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369349 369349 I think we have to have some major moves in economic growth before > we have to worry about any significant changes in inflation. > > If you have an opinion, tell me about it at http://www.InvestorPitStop.com]]> Wed, 28 Jan 2009 21:21:30 -0500

On Jan 28 07:13 PM jrs87sch wrote:

> I think we have to have some major moves in economic growth before
> we have to worry about any significant changes in inflation.
>
> If you have an opinion, tell me about it at www.InvestorPitStop.com]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369276 369276 Wed, 28 Jan 2009 19:13:03 -0500
If you have an opinion, tell me about it at www.InvestorPitStop.com]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369257 369257 Wed, 28 Jan 2009 19:01:02 -0500
I totally agree- worth the little amount of time to read. Highly suggested and to whoever out there that did --Thanx.

thepriceofeverything.t.../]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369216 369216 Wed, 28 Jan 2009 18:14:05 -0500
According to Adam, a steady availability of commodities & rise in money supply brings inflation. OK, and that clearly is a supply-demand event. But now, hold money supply steady and reduce available of commodities. That causes prices to rise just as certainly and that again is a supply-demand event. But this Adam refuses to call inflation. (The second situation is basically the example Adam gives re the Texas oil town boom in housing prices -- money supply holds steady and demand for limited commodities increases.) It all is inflation, whether you look at it from the money or the goods end. The result is exactly the same – your money is worth less because it is able to buy less.

What Adam is doing is just sort of academic massaging – artificially separating two supply-demand events that lead to exactly the same result, and arbitrarily choosing to define only one as inflation. Adam quotes couple dictionaries in his May 16, 2008 article (www.zealllc.com/2008/m...) as if to substantiate his definition But if you Google “inflation”, read Wikipedia, refer to Websters, it is clear that Adam’s definition is archaic and inflation is instead defined as: “Price level attributed to an increase in the volume of money and credit relative to available goods and services”. So, a change in either money supply or availability of goods/services can cause inflation. That is simple and makes much more sense in my head an my wallet.

Maybe I’ll can charitably give Adam that, if the supply-demand event happens only in one Texas town and nowhere else, he can call it no more than a supply-demand event, without qualifying it as inflation. But, if the corresponding kind of event happens throughout the USA, there is inflation in USA. If I go to Safeway and all my food suddenly costs more, I know it is inflation, regardless of what kind of narrowed academic exercises Adam Hamilton wants to indulge into. So, don’t rile Adam – the sun is not black. We all can clearly see it is white, bright, and we can feel it.

As far as “Big Inflation Coming”, -- yes. But the critical question is how soon. As long as employment is down, as long as credit is scarce, there is no money to spend and no demand for goods. Therefore -- no inflation.

To say that just because the Fed is broadcasting cash from helicopters, there is immediate inflation, is only half of it. What is happening to that cash? What caused the rise of housing prices, the bubble that give consumer piles of cash to spend, was that the banks could bundle mortgages into MBSs and resell them to Lehman Bros. and likes all over the world, who overleveraged themselves into endless debt, at 30:1 and more. Thus, that credit appeared to create a sea of cash to drive the economy. Now, that this house of cards has collapsed – think about it – isn’t all the TARP money is going into deleveraging banks and investment houses out of bankrupcy? It is certainly not going into the economy to create demand for goods. It is dead money. So – no inflation as of yet.

If Obama succeeds in raising employment (or the private sector does), that’s when inflation becomes a discussion. Gold (and to a lesser degree oil, copper, etc) is a different story.

That, I think, is the very simplest way to see where we are. What do you think?

]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-369051 369051 Wed, 28 Jan 2009 15:47:34 -0500
Mr. Hamilton is correct in pointing out that temporary supply/demand phenomena do not make either an inflation/deflation but rather the underlying fundamental definition of money supply- is the more apropos and rational view.

As can be seen from the chart - the monetary base has increased and shall increase even more dramatically in the following year/s. Whether it is parked with the Fed/Treasury/private bank makes little difference and the distinction coupled to velocity of money is moot.

Ultimately -like any producer (the Fed being a producer of credit/money) - it must continually turn to economies of scale and surplus to remain profitable. This is essentially inflation. Inflation is the by word and pledge of all central banks (check the data worldwide and be clarified upon this point) because as a producer -it must continue to supply the market and as many dominant producers (pharmaceuticals/elect... is not above creating supplier-induced demand.

The principle of fractional reserve which started with unscrupulous goldsmiths and other Shylocks has been legitimized for a few centuries now. The implementation of a formal fractional reserve system which through its subsidiaries (banks, etc) have essentially used decreasing reserves and increased leverage to create enormous return on investment primarily through interest charges. The mower the interest rate-the greater the proportion of leverage required to generate interest income. In addition - the recent phenomena of globalization is nothing more than extreme leverage by 'developed' nations to co-opt 'under-developed' nations resources (oil/labor/etc).

Why train , fit and establish armies and bases when extreme leverage and low interest rates wll allow a pan-national corporations to effectively annex a nations resources (China/India/etc), If it can not be done in this manner -the more expensive and onerous method of war must be applied (Iraq)- at 2 trillion and counting.

What caused this so-called debacle. It was not the paltry 60 billion or so of subprime mortgages -nor its leveraged equivalent of 2.4 trillion dollars. Which has been effectively guaranteed by Fannie/Freddie Mac backing. This debacle has been accelerated because the reserve ratio's clearly showed that the so-called 'most powerful/rich' institutions in the word are insolvent,

If the same scale of leverage is used for the reserves of China/Japan and Russia (3.2 trillion dollars) -then effectively -these three countries own lock stock and barrel everything in Europe, the USA , Canada and Australia. In short- despite all the blather about economic - in the real world these models are but a farce. Throw in the arab countries and quite honestly -Europe will once again -'magically' as it did previously slip into the dark ages. A euphemism for being under the hegemony of other nations.

Why can not these surplus countires use the same principles of leverage as the US/Europe do and in short bail out every nation on Earth using the same principles that we have seen since the 1600s? Why is not possible for Russia/China/GCC to do what US/Europe do and buy these failing institutions that IMF has deemed on previous occasions (where the venue was not on their 'turf' ) the best course of action to be sold off to more profitable and prosperous private firms regardless of origin.

So in short- there is no shortage of money. There is an actual shortage of sovereign wealth. Due to this lack of sovereign wealth -the west continues to engage in further leverage and further debt because it chooses not to give up it's failing institutions and condemns its sovereign population to the burden of debt for several decades until one day -default inevitable comes.

With in twenty years -there will be a move away from surplus countries to finance their own colonizations. Already China has signalled this by allocating a staggering 500 billion dollars in CASH to its own country-using leverage -that would be close to 20 trillion dollar!!



]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-368862 368862 Wed, 28 Jan 2009 13:27:16 -0500
With respect to the money supply, I agree. Banks WILL escape their defensive postures, and the quantity theory of money will hold. These effects are rarely, if ever, immediate.]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-368837 368837 Wed, 28 Jan 2009 13:16:02 -0500
]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-368781 368781 Wed, 28 Jan 2009 12:47:31 -0500
Oh sure, as another writer stated, we may see price increases in essential products such as health care, food, etc, but on the whole, I believe there will be very few price increases. Real estate for one, will certainly not go up while millions of homes are coming on the market under foreclosure; and new projects will not come on line while the banks are in their current lending freeze. And as for our auto industry, if the automakers cannot sell their cars at current price levels, how could they be expected to sell them for more? Wake up everyone, not to be a bearer of doom and gloom, but I'm afraid that times will be getting a lot worst before they start to get better...and that I suspect will be a long time off.
]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-368603 368603 Wed, 28 Jan 2009 10:56:45 -0500 Is oil going back to $100 anytime soon? doubtful.

How about residential real estate?
Much tighter credit..years of over supply..declining incomes...soaring foreclosures. Real Estate has a long way to go on the downside.
Liquidation of forecloses is 25-50 cents on the dollar...that's contraction.
Rental rates are also contracting which is a negative to investing.
That means all the services and industries tied to real estate are dead.

Commercial Real Estate....retail...hot... prices...
dead in the water...

autos? yachts? travel? How about trade with China?

Does anyone really see a long term equity rise based on earnings the next few years? Sure, food and taxes and health care will inflate. Without big time leverage my outlook is weak for assets and consumption. Any stock market rallys are nothing more than speculative trader swings.





]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-368184 368184 Tue, 27 Jan 2009 21:24:02 -0500
The members of this healthy tribe better not show their health (wealth) because we now have elected officials to reallocate their medicine (assets) to the unhealthy masses. ]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-368177 368177 Tue, 27 Jan 2009 21:18:58 -0500 crashmarketstocks.com , Thats why Im in GDX and GLD]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-368070 368070 Tue, 27 Jan 2009 17:28:10 -0500
Didn't we just experience an inflationary period from approximately 1999 to 2006/7/8? What happened to house prices during that time? How about gold? Oil? Equities anyone?

I don't care how much peanuts, Cap'n Crunch, or a bunch of basil increased in price over that time if the most expensive items I will ever purchase (home, gold, oil, equities) skyrocketed.

How is the money supply the main indicator of inflation as long as the FRACTIONAL RESERVE system exists. How is this not considered by any inflationists. at. freaking. all.

Who needed the Fed to inject money into the system when the commercial banks were able to do it themselves? Now the Fed is plugging the black hole of debt that the fractional reserve system created. IMHO, the inflationary period has passed; now the creators of the latest inflationary period (commercial banks) need the money from the Fed to keep them on life support. Think about it, the money that the Fed is printing now should've been given to the banks from 1999 to 2006/7/8. That's when the inflation occurred, but anyone who was just paying attention to the money supply and not to the home/oil/gold/equity prices missed the party.

Gold is not decreasing in value because of the demise of other currencies. Paniced Brits, Icelanders, and Latvians are keeping it afloat (but so have my purchases...shhhh).]]> http://seekingalpha.com/article/116297/comments?source=feed#comment-368053 368053 Tue, 27 Jan 2009 17:05:06 -0500 http://seekingalpha.com/article/116297/comments?source=feed#comment-368052 368052 Tue, 27 Jan 2009 17:02:18 -0500