mcadoo3312

Waiting for Inflation? It May Take Awhile

Overall I understand where you are coming from, but some of your points are flawed. Using the M2 money supply growth isn't a great indicator of future inflation based on the nature of its calculation. To me, this increase is more based on investors fleeing to cash and money market accounts. There is a reason the chart above is beginning to flatten; the majority of panic selling occurred in October and November of last year. Volumes on selloffs are decreasing, indicating this mania is beginning to subside. M3 is no longer reported, so the effects of governmental spending is not quantifiable.

That being said, for consumers, it is the velocity of money that will catalyze inflationary growth, as evidenced by CPI, in the short term. This is no where near the problem we will face when the massive Treasury issuance, especially in the short end of the curve, comes due. Combine this with all of the other issuance around the world and one must ask where the buyers are going to come from. Not everyone can rely on China. The real inflationary problems we face have been pushed off further down the road, and they are much worse than whether or not the Fed can get the liquidity they have put in the system out of it.

A Fed Rate Hike Won't Solve the Current Crisis

T. Boone Pickens has emerged as the sole bi-partisan leader in 2008. Of course he has his own monetary interests in the outcome, but wouldn't you invest in a mutual fund in which the manager has millions of his own cash invested in it?

Bust, Bail, Repeat: The U.S. Enters into an Ever-Worsening Cycle

I agree with your points luckychucky, but you are ironically guilty of bashing the name caller by calling him names.

Nonetheless, there is every reason in the world to be negative. Investors intuitively prepare for the worst possible scenarios, so sentiment in our current situation should not be surprising.

To me, it is worthless to point blame on what has been done in the past because it is over. It seems as if the Fed and Treasury have also come to that conclusion. Regardless of whether they caused this to happen, would you like for them not to clean up their own mess (via taxpayer dollars, an issue I understand is incendiary) and watch those American doomsday scenarios play out?

I am not extatic with the Housing Bill because of its implications on our country's debt levels and related problems, but realistically I do not see they had any other alternative. The word "contagion" became commoditized with Bear Stearns, but without any intervention, do you truly think this situation would not have spiraled out of control, especially when you consider all of the factors going against us? With our debt levels so terribly high and other countries only increasing their surpluses, it would only be a matter of time that this disaster would denegrate our position as a global leader. They did what they had to do.

People's expectations of instant relief are unrealistic. This mess is going to take time to unravel. Institutional intervention goes against free market theories, but what if the United States were the failure of this sorry episode that most free market individuals invite to signify the end of a downturn? Would you complain that the government should have done something? Probably.

I am not saying everything is rosy and great, because it's not, but I do think these initiatives will help this country in the long run - with one asterisk. These officials need to verbally acknowledge the need to position this country to be an effective global leader in this new economic paradigm and follow through on it. Can this happen with partisan politics? Maybe, but if they do not make changes, all of these current initiatives are for not, and they will only compound our present troubles. Think more in the long term, not in the short term.