BS Flag Thrower

Evidence That Big Inflation Is Coming

Liars can Figure but Figures don’t lie.

"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).