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You can't hide what isn't there

    While reading from a shark-jumping conspiracy site, I came across this claim:
"Collapse in housing prices is masking inflation."

    Note the assumption. Somehow, housing prices are distinct from any other use of money supply.
    While I don't expect the best from that Zero Hedge, I have seen this notion echoed among those one would hope were more thoughtful, and I think it needs addressing.
  
   First, remember what inflation is. It is a net expansion of money supply It is not "prices of one thing going up".
    People will point to the Federal Reserves desperate attempt to reflate the economy, and claim this is inflationary. But all of the electronic credits they create produce an equal and opposite claim on future money supply, so are not really inflationary.
    Further, there extra credits only effect money supply to the extent that they actually circulate. Money velocity is very low now.
 
   But there is a bigger fallacy here, and that is the notion that housing prices somehow 'don't count'. This says something about how short people's memories are. I can remember when people with jobs had trouble finding decent housing, because prices had been bid up so high.
    But that demand was artificial, brought 'forward' in time by artificially low interest rates, and thus unsustainable. And so now my neighborhood, like most others, is littered with "for Sale" signs, and Very well motivated landlords.
    Ths drop in prices (wich shows no signs of being over), however troublesomme to providers of real estate, is a very real boon to consumers. So How in the World does one justify omitting it from consideration for inflation? The reason is simple: It fals to support expectations.
      The fact is, as effective money supply is stagnant, people only have more to spend on food and gas because they need to spend that much less on hounsing. That's not inflation. It is a change in patterns of spending of The Same amount of Money. A change that is itself an attempt to renormalize a prior skewing.

   Here's some more d points. Prices of mny comdities are up . . . if they have futures contract associated with them. Precious metals? Check. Grains? Check. Petro? Check. Fresh fruit? Um . . . well, no. Cheaper than last year, actually, at least where I live (and Tennessee is not a big producer of grapes and oranges). Why not?
Because there is no convenient way for speculators to use artificially cheap money to make highly leverqaged bets on fresh fruit.
    Now I am not one of those who runs about proclaiming that speculatrs are evil. They are useful, and they usually loose money, so I see no reason to pillory them. But, since they exist, it behooves us to take their workings into account. And when interests rates (which are their 'entry costs') are held artificially low, speculators will be more active.
    And here we are. Low interest rates, the expectation of their continuation indefinitely, hyperactive speculation, jacked up commodty prices. Meanwhile housing, the biggest chunk of the economy, plumets in value. That is not inflation. At least, not any kind I've ever heard of.