PeakTrader.com Forum Index PeakTrader.com
Economics, Portfolio Optimization, and Technical Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 
Log inFast Charts

Inflation

 
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Economic Review
View previous topic :: View next topic  
Author Message
administrator
Site Admin


Joined: 28 Dec 2005
Posts: 10291

PostPosted: Tue Aug 18, 2009 10:35 pm    Post subject: Inflation Reply with quote

Some believe inflation will remain contained, because the U.S. money supply hasn't grown as fast as before (see chart):

http://2.bp.blogspot.com/_otfwl2zc6Qc/SocMZNLU_-I/AAAAAAAAK7A/yoJy1shAHbA/s1600-h/m2.jpg

My comment:

"Inflation is always and everywhere a monetary phenomenon" is true only in the long-run, because of shifts in the foreign exchange market or changes in the velocity of money in the short-run. It should be noted, monetary policy prevented a deep depression in the 1970s, similar to the 1870s and 1930s (there were several recessions from 1970-82, including two severe recessions).

Also, many shocks take place, e.g. Y2K (when the money supply spiked higher and then lower around 2000, i.e. the monetary base or high powered money), 9-11, an oil shock (or commodities in general), minor technology shocks in the '80s and '90s, and the quick and massive "Creative-Destruction" process in the early '00s.

Economies are often too dynamic to accurately predict. I expected China's economy to collapse, along with other major net export countries. China was showing production strains, including cutting corners exporting unsafe products, received increasingly smaller gains of trade, and had enormous social costs. However, the U.S. economy, along with the Republican party, imploded instead.

U.S. households didn't get much of a bailout. Instead, they were burdened with even more debt from massive government spending. It's uncertain how that will play out, e.g. Americans working harder and longer to pay-down debt, adding to future economic growth, or consume less to strengthen their balance sheets, leading to slower economic growth.
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Economic Review All times are GMT - 8 Hours
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by PeakTrader 2.0.8 © 2001, 2002