fed in business to keep their owners, the bankers in high cotton. job number 1. they electronically printed trillions. now they are taking punch bowl away. the inherent inflaiton bubble of printed dough is bubble of everything. now things collapsing. inflation will be around for awahile in printed money. probably take 5 to 10 years of stagflation to work out of system.
Jojo
1 year ago
Hey buddy, here’s an inflation tip: 1st class stamp price is increasing in July to 60 cents. Better stock up!
The USPS is certainly helping inflation along. Rates to rent a small POB have increased significantly over the past 20 years but have been increasingly steep since Louis DeJoy became Postmaster General in June 2020. In 2001, the years fee for a small POB was $38. For 2020, the price was $122 annually. In 2022, the annual fee is now $202!
david halte
1 year ago
Can the public have inflation expectations, when the measure of inflation is obfuscated by the Fed and BLS. Average home prices increased during the decade of 1970s by 272 percent, when cumulative inflation was 103 percent. During the last 10 years average home prices inflated by 217 percent, while cumulative inflation was only 25 percent.
Janet Yellen states the Fed can influence the markets by ‘jawboning’ information. And Jerome Powell mentioned in his last statement that there could be more inflation surprises. He obviously knows, but does not share his expectations.
FromBrussels
1 year ago
Nothing to worry about folks , evwythin gonna be jus’ fine ! At this very moment the famous Wining and Dining club G7 is meeting. They are all there : gullible, clueles yet ever so corrupt Von der Lying(her husband is in the vaxxing business), totally worthless Charles Michel( worthlessness being one of the criteria to get elected president in the EU), peasant Boris from the triggerhappy ex commonwealth, Rothschild s Macron, alias Louis XIX, Babyface ,would be dictator Trudeau, Draghi who ruined the european financial system beyond repair, senile Biden of course, the Japanese Samurai who doesn t mind no longer that the US nuked the * out of his nation a odd 70 years ago, Did I forget someone ? oh yes that german *hole ruining his own fn country . Never mind though, our Winers and Diners have already decided to ban gold from Russia, apart from that, they ve been joking about Putin riding a horse bare chested years ago. That s in fact about all they can do I guess now that their Nazi Ukraine battering ram is being reduced to splinters. Oh yeah before I forget , Russia thanks France for the conquered Ceasar cannons , Russia is going to analyse and even improve them ….
RonJ
1 year ago
“Yet, Fed Chairs Janet Yellen and Jerome Powell did not believe the Fed’s own study.”
Have Greenspan or Bernanke been asked for their response, yet?
Salmo Trutta
1 year ago
Concur. Interest is the price of credit. The price of money is the reciprocal of the price level. Inflation expectations “is the simple difference between yields on nominal Treasury securities and yields on inflation-adjusted Treasury securities”. 2021’s expectations did not accurately predict the change that occurred in 2022.
Powell:
“The connection between monetary aggregates and either growth or inflation was
very strong for a long, long time, which ended about 40 years ago”.
How did Powell keep his job? The distributed lag effect of monetary flows, the volume and velocity of money, have not been “long and variable”, they have been mathematical constants for > 100 years. The problem is both that Powell doesn’t know money from mud pie, but also doesn’t know its inflection points.
No one at the FED understands money and central banking. Take Mutual Savings Banks. Their correspondent balances in member banks were designated as interbank demand deposits, or excess reserves (which are excluded from the money stock), up until March 31st, 1980. After the DIDMCA the S&L’s and CU’s deposits in member banks weren’t designated as IBDDs and are included in the money stock.
I.e., the FED’s Ph.Ds. don’t know a bank from a nonbank. Thus, they turned the nonbanks (the S&Ls, CU’s, and MSB’s) into banks and caused the S&L crisis. Greenspan dropped reservable liabilities by 40% and caused the GFC. Bernanke contracted required reserves for 29 contiguous months, turning safe assets into impaired assets. Bernanke also remunerated IBDDs and induced disintermediation, a $6.2 trillion drop in the nonbank liabilities.
“Interest is the price of credit. The price of money is the reciprocal of the price level.”
When I went to school….
The interest rate is the price of money. (full stop) I think your ‘reciprocal of the price level’ is with ‘purchasing power’, and a quite different beast.
Savings flowing through the nonbanks
never leaves the payment’s system (where all monetary savings originate). The source of interest-bearing deposits is other bank deposits, directly or indirectly via the currency route (never more than a short-term seasonal change), or through the banks’ undivided profits accounts. There
is simply a transfer in the ownership of existing DFI liabilities within the
payment’s system (an exchange in the counterparties of existing deposit
liabilities, a velocity relationship). There is no change in the money stock, no change in total bank liabilities, assets, or earning assets.
It is true that the Keynesian economists have achieved their objective, that there is no difference between money and liquid assets [sic].
Contrary to professional economists, banks aren’t intermediaries between savers and borrowers. Deposits are the result of lending, not the other way around. Secular stagnation is the impoundment of monetary savings in the banks, a deceleration in velocity. All bank-held savings are lost to both consumption and investment, indeed to any type of payment or expenditure.
Both stagflation and secular stagnation were predicted in “Should Commercial Banks Accept
Savings Deposits?” Conference on Savings and Residential Financing 1961
Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43.
“Profit or Loss from Time
Deposit Banking”, Banking and Monetary Studies, Comptroller of the Currency,
United States Treasury Department, Irwin, 1963, pp. 369-386
Princeton Professor Dr. Lester V. Chandler, Ph.D.,
Economics Yale theoretical
explanation was:
1961 – “that
monetary policy has as an objective a certain level of spending for gDp (sounds
like N-gDp level targeting today), and that a growth in time (savings) deposits
involves a decrease in the demand for money balances, and that this shift will
be reflected in an offsetting increase in the velocity of demand deposits,
DDs.”
Corwin D. Edwards,
He taught
at New York University in 1954, the Chicago School from 1955-1963, the University
of Virginia, and the University of Oregon from 1963-1971.
Edwards: “It
seems to be quite obvious that over time the “demand for money” cannot continue
to shift to the left as people buildup their savings deposits; if it did, the
time would come when there would be no demand for money at all”
The “S-Curve” dynamic damage (sigmoid function), or the culmination in
the “monetization” of time deposits ended by the first half of 1981
As Professor emeritus Pritchard, Ph.D. Economics, Chicago 1933, didn’t mince his
words, and in May 1980 pontificated that:
“The Depository Institutions Monetary Control Act (which turned the thrifts
into banks), will have a pronounced effect in reducing money velocity”.
This is corroborated by: The riddle of money,
finally solved BY Dr. PHILIP GEORGE
The riddle of money, finally solved (philipji.com)
As I commented on 12-16-12, 01:50 PM #1 when the FDIC’s unlimited transaction
deposit insurance was reduced to $250,000:
“With low inflation (given some deficit resolution), Jan-Apr could be a
zinger”
Zinger – a surprise, shock, or piece of electrifying news.
That’s what accelerated
the drop in the unemployment rate from 8.0% to 5.0% by Dec. 2015.
The FDIC’s increase in deposit insurance from 40,000 to 100,000 in 1980, and from 100,000 to unlimited for transactions deposits in 2008 caused a cessation in the transaction’s velocity of funds. It reduced the savings that were invested.
If Powell wanted to stop
inflation, he would re-institute reserve requirements against his new
definition of transaction accounts (Regulation D), or what Nobel Laureate Dr.
Milton Friedman advocated, December 16, 1959. Powell doesn’t give a damn about
inflation.
What we mean by interest is the price of overnight interbank lending, the lowest rate which is the base of other interest rates.
The price level can be called inflation. High interest rates suppress inflation and vice versa, i.e. are reciprocal.
In a functional system, interest rate should be above inflation to reward savings.
In a dysfunctional system, interest rates are below inflation, and banks discourage savings, and rely ultimately on financial tap from the central bank.
LSAPs increase the supply of credit. Thus, they put artificial downward pressure on interest rates. The remuneration of IBDDs is a Romulan Cloaking device. Whereas the 1966 Interest Rate Adjustment Act created a .50% interest
rate differential in favor of the Savings and Loan Associations (the thrifts,
the nonbanks), the Emergency Economic Stabilization Act of 2008 provided a
preferential interest rate differential in favor of the commercial banks, which
induced nonbank disintermediation (where the size of the nonbanks shrank by
$6.2 trillion dollars, while the banks were unaffected, increasing by $3.6
trillion dollars). Who do you think sells the most T-Bills back to the FED?
In recessions there are delinquencies, evictions, vacancies… OER can tank.
8dots
1 year ago
OER Owner Equivalent Rent is the biggest component of the CPI. Add mortgage, insurance, taxes, repairs, furniture, fees…and there is little left by the end of the month.
Fred : since Mar 2020 Case Shiller is up from 215 to 294, up 37%. Rent of Primary Resident up from 340 to 365, up 7%. 37/7 = 5. ROA is poor.
RE prices are rising x5 faster than Rent. We are in an inflection point : a strong dollar, high commodities prices, at the same time : SPX, Bonds and high end RE massacre. Something is wrong.
worleyeoe
1 year ago
When I see on in the news that the BLS reports chicken is up 16%, but my Kroger boneless chicken breasts shot up from $1.99 to $2.99 (+50%) then my inflation expectations do tend to jump by large whole number values, and I’m a HS math teacher. Why? Because I honest feel like the BLS attempt to capture real CPI has been rigged to keep SS COLA increases lower than they would be otherwise.
Mish, “Alas, neither the Fed nor economists see home price inflation as inflation.” And this is why real inflation is much higher than 8.6%. Without being able to track what the cost of moving from renting to owning or moving up in ownership really costs, then you’re not tracking true inflation. And, when housing gets really out of whack like it has been for 3-4 years now, then the Sunami of 30%, 50%, 90% refi’s creates enormous demand for goods. And in most cases, people’s mortgage goes up which is self-inflicted inflation but inflation none-the-less. Each person has to weigh whether the $100, $200, or $300 is worth the $50K, $100K or even $150+ plus in real money they put in their pocket. Property taxes have gone up significantly. Hazard insurance has gone up due to the cost of rebuilding exploding. As far as I know, none of these inflationary pressures are captured in CPI.
Bronco
1 year ago
“Yet, Powell and the St. Louis Fed trust their disproved inflation expectations models. It has led to policy errors already and will lead to more of them.”
…
Yes.
Re Sentiment and Confidence surveys I only pay attention to “current”.
“expectation” I ignore.
In not too distant future “current” concern will be disinflation / deflation.
Pardon my language…..It is the massive debt overhang, stupid.
US hasn’t experienced a credit event yet (it will). As financial conditions tighten, zombies (corporations / household / municipalities) that can survive only on ever looser financial conditions will be the ones naked as tide recedes. As lenders losses mount, conditions will tighten even more. Rinse / Repeat until bottom reached. We’re only in the early innings.
AWC
1 year ago
Put another way, dollar devaluation expectations, over the long run, are a given. Unless one believes gold is going back to $32 an ounce, and a 3/2 house in the suburbs will fall back to < $10,000.
And yes, currency devaluation is Central Banking’s stock in trade.
Nothing is a ‘given’ except death and taxes. There is a range of possibilities with different probabilities. One possibility is ‘markets regress to the mean’–over time it works rather well, i.e. a high probability. Gold bugs might assign a higher probability to the ‘Fed creates cluster fudge’ possibility, but they will come out ahead with regression to the mean.
Christoball
1 year ago
The gas example brings to mind that gas inventories in cars are fuller than they were before. People expecting a higher price will utilize the storage capacity of their gas tank to store gas. With 270 million registered vehicles in the US, a 5 gal average increase in gas stored in tanks per vehicle is a whopping 1 billion 350 million gallons of stored gas. When people start seeing prices drop; that average 5 gallon excess reserve will be used up in anticipation of lower prices. Margin psychology will flip. When millions of cars everyday forego buying gas for a day or two waiting for cheaper gas then prices will drop even more. As Captain Ahab points out Oil and Gas prices are always working the margins. I have seen it happen many times. It is a beautiful thing.
JeffD
1 year ago
Homes in my area have repriced from $400/sqft to $600/sqft in the last two years. That is far above 10% inflation, and housing is an unavoidable cost in life.
Captain Ahab
1 year ago
Do you buy gold now if you expect the price to be 25% higher in a year? Or do you wait a year?
Of course, gold is not a typical consumer product, and does not have a shelf life, but why should that matter–in principle?
Expectations of future prices drive demand at the margin–the key word. If only one percent of people buy gas today because they think gas prices will be higher tomorrow, that one percent increases demand at the margin, and gas prices adjust accordingly. With constrained supply, the impact might even be noticeable.
Now, as to the capacity of people to form reasonable expectations regarding economic issues… that might be a problem, yet acting in concert, they are the market. Sampling might be an issue, ya think? Not that economists would be any better at forming expectations, although they seem okay when the past predicts the future. It gets messy when uncertainty is lurking, such as now.
I continue to say, the Fed is in control until it isn’t. I think we are approaching the inflection point.
goldguy
1 year ago
Inflation caused by typical supply demand issues is not what I see . The shortages from the COVID lockdowns are the issue.raising interest rates will not help
Yeah. I figured you wouldn’t even attempt to prove them wrong. And you sounded so sure of your statement. Let me know when you can prove that the current global warming is natural. Till then, I will follow the science and ignore folks like you who want to believe it’s natural, but can not prove it.
If you are comfortable believing someone other than yourself have at it. Everyone has a book to sell… there is alot of money to be made in a false narrative, climate change, and one of my favorites,COVID.. I hope you didn’t get the jab…
Your argument is PROPERLY PHRASED: The data collected (and manipulated) supports the hypothesis (of whatever) with a level of confidence of x% (or correlation coefficient).
Here is a question for you. How does the IPCC include (both statistically and in hypothesis formulation) the effect of variations in solar output over time?
“The IPCC estimates that natural causes – which
range from solar activity to volcanic eruptions (such as the one in
Krakatoa in 1883 which lowered temperatures) – have seen temperatures
rise a mere 0.05C above the average from 1850-1900.
In effect, nothing.
But human activity has increased temperatures by nearly 1.2C.”
Now, the fun part–what to do about it:
To ‘save the planet we need “to cut emissions by around 45% by 2030.” Sounds like a typical liberal tax and waste program, and economic dislocation. Meanwhile, aren’t you investing in oil and gas?
We are experiencing the side effects of cutting emissions right now. There is only one way to lower the impact of humans on the planet to a safe level. Reduce the population dramatically.
Historically, climate temperatures have varied. Seas have risen,and fallen–there are trilobites (see here: link to en.wikipedia.org) in Ohio, 700 feet above mean sea water in a geologically stable region. This was long before humans walked on the planet. Ergo, it makes sense to look for possible natural causes, does it not?
Next, the old adage about ‘finding what you are looking for’ holds for science, DESPITE the scientific method/alternate hypotheses.
Finally, the current hypothesis concerns climate change (not warming)–now that is a difficult hypothesis to support with data. One way is looking at the difference in variance in climate over time. However, for political-media ‘science’, any out-of-the-ordinary weather event qualifies–so easy to sell to non-critical thinkers.
Yes. Everything you said about the past is true. And how do we know this? From the scientists who did all the hard work to discover the climate history of this planet. The same scientists who now tell you that the current global warming is not natural at all and is in fact caused by mankind.
But because of your political brainwashing, you selectively decide to ignore the science when it does not suit your politics.
Lol! You probably don’t even realize how “misinformed” this makes you look.
A long time ago I learned my expectations are not necessarily those of everyone else. The obvious question is what are they seeing that I am not seeing?
How big an inventory should there be and at what price level? How adjustable is supply to changes in demand, and shifts in demand? What is changing that might affect demand for energy, beyond demand destruction caused by higher prices?
Supply is not responding to demand. If it was, inventories wouldn’t still be dropping.
Demand is not responding to higher prices or economic conditions. If it was, inventories wouldn’t still be dropping.
And that’s in spite of the supply being boosted by SPR releases, which will end later this year. Then that will boost demand in order to refill the SPR.
Next question, why is supply not responding? Hint: constrained supply requiring a large amount of infrastructure…. Russia-Ukraine was a glitch–already being worked around. Covid slowed demand and supply. How soon does supply come back on line, and demand returns to pre-covid levels?
Demand is responding. Note how the price has dropped recently? It will pop again come July 4th. Maybe it will increase during summer. Drop down in Fall…
The change in demand (NOT A SHIFT) is not as fast as it might if there were effective substitutesWalking 20 miles to work, riding bike to the supermarket, risking your life on public trans etc. and not very effective substitutes.
Supply has responded as best it can, yet it is still not enough.
OPEC took almost 10 M bpd off line in 2020.
And OPEC has spent the last year bringing it all back on line. The president of OPEC says that they have now run out of spare capacity.
In April and May they were supposed to add 432k bpd each month. The actual number for April was 10k. In May, it went down!
They are supposed to complete the return of all spare capacity in July and August with 650k bpd each month. Lets see how much they actually add.
In addition the US has been releasing around 1 M bpd from the SPR from Oct 2021 to Oct 2022. And several other countries also agreed to SPR releases. That is a lot of extra supply that is helping keep prices from going higher, for now. What happens when that ends this October?
US crude oil production has been nudging up a bit, but not much, as the majority of oil companies have been cutting back on capex for years. And it isn’t something that can be turned on like a light switch.
What is going to happen once OPEC is out of spare capacity and SPR releases end later this year?
Where will the supply come from then? And don’t forget the extra demand that will come from the US and other countries attempting to refill their SPRs.
“How soon does supply come back on line, and demand returns to pre-covid levels?”
All readily available supply is already back on line as previously mentioned. And Demand is already back to pre-covid levels.
Demand for gasoline in the US hit its highest level of the year last week. Is that the response you mean?
Face it. Demand remains strong. And Extra Supply is about to hit a brick wall towards the end of this year.
Eventually there will have to be much higher prices to create the demand destruction that is necessary. We aren’t even close to that point yet because of the supply increases that we have already seen this year.
Of course you can help support the cause by walking and bicycling more to keep prices down for me.
Thanks!
8dots
1 year ago
The market is a casino. We don’t know what will happen next. To be fully committed to rental properties and expand it at possibly peak market, might be a mistake. A prolong deflation can injure rentals for decades. Being aggressive at inflection point is risky. It’s a viable option.
“A prolong deflation can injure rentals for decades.”
Correct, and prolonged inflation will do the opposite for rentals. This is what makes a market. Some people believe in deflationary collapses and others don’t so there will be winners and there will be losers. This is what happens every day in America. Some people cross the street and get hit by a car, others continue on their day with no consequences.
the people that are consistently “right” end up rich and the people that are consistently “wrong” end up poor. you should try to listen to people that are rich not those that are poor except to learn from their misfortunes. Read enough comments here and you’ll understand who is who.
One definition of intelligence is the ability to to ‘see’ patterns (and relationships).
Mish
1 year ago
“Is there a 40-50 year chart of Expectations vs CPI?”
I have downloadable data on this.
Amusing
Will do a post with charts on this next week.
8dots
1 year ago
Inflation expectation between 1% and 3.5%. Error : what if inflation flip to deflation. Look at Inflation on Tradingview to the left of the chart, to WWI, it have happened before.
Doug78
1 year ago
For small purchases higher inflation expectations don’t matter much but it does matter for big-ticket items like housed and cars. If you believe the price is going up you will have the incentive to buy now rather than later. We have recent examples of this happening. It works for assets but much less for services but even then if you have to have major work done on your house you might want to have it done now rather than wait because the price will go it. In inflationary times the velocity of money increases because in that environment money is a wasting asset. The increase in velocity creates a feedback loop which causes more inflation unless it is stopped quickly. The Fed probably is going to keep on with this new policy. I think it should be clear that they are not going to “save” the market this time around. Bigger problems are afoot. A bear market is temporary but an bad inflation risks to not be so they had to make a choice and once made they now seem to take pleasure in not flooding the markets with liquidity as they had before.
Germany is planning to repurpose the part of Nord Stream II that is in German waters. They will expropriate it and connect it to one of the floating storage and regasification units (FSRUs) they already chartered. Then the LNG ships can link up with the FSRU, send the liquid gas to it to be converted back into gas which then flows via the expropriated pipeline into the German gas distribution system. When Russia cuts off the Nord Stream I they can do the same thing using a second FSRUs that had chartered. Doing it that way they will save a lot of time and money. It is an elegant solution. When Germans release themselves from bureaucratic hurdles they can move surprisingly fast.
I’m not so certain I agree with you on this Mish. I think energy is gonna be the wildcard. When China ramps back up from their Covid lunacy oil will rise. The Ukraine situation is not going to be resolved anytime soon. And gasoline refining capacity is lower with the sanctions on Russia taking Russian refined products off the market. Inflationary energy costs will have a broad inflationary impact on most production.
You would think the Ukraine war will be ending before the end of summer. Propaganda notwithstanding, it seems Russia will have accomplished its goal sooner rather than later.
And how do you know this? Or is it just more crap that you make up? What is your source? Maybe Putin phones you to let you know so you can share the info with the commenters on this blog?
8dots
1 year ago
Option 1) The Fed fight inflation by sucking liquidity from the banks and “radical” hikes. Option 2) There is panic in the o/n market. Primary
banks, MM… are seeking refuge in the Fed vaults. The Fed fight deflation by providing good collateral to the clogged repo market, preventing a
collapse. // The CPI 8.6% is a bar o ignore. Russian oil is sold to China & India at steep discount. India is taking profit in the spot market.
Diesel crushed the farmer. Lower diesel will crush inflation before Nov election.
There has been warning sent that the oil added to diesel is running out, ie Diesel shortages are coming!!!
Felix_Mish
1 year ago
I’d think the results of an “expectation” survey might be useful as a trailing indicator. The people answering the survey would be linearly extrapolating what they’ve perceived the last 2 or 3 times they’ve noticed the item under question.
Nothing is ever quite so simple, though.
For instance, older people will often associate some outside event (e.g. an election) with the item under question and that association could override the simple extrapolation.
Too, we often ignore direct observation of the item in question and only perceive what we are told to perceive.
Maximus_Minimus
1 year ago
I would add that expectations of future demented policy direction by the above mentioned actors is driving asset inflation including gold rush in property purchases.
Self reflexion isn’t a strong suit for these monkeys.
Six000mileyear
1 year ago
Is there a 40-50 year chart of Expectations vs CPI?
Computing the correlation between expectations and CPI, with and without a 1 year delay on the expectation, may also provide some insight into how people view inflation.
The vast majority of forecasts are of the ‘past predicts the future’ type; so yes, ten years of Fed meddling is expected to continue, last week’s price hikes will be the next week’s price hikes, and so on. The debt bomb is the big unknown IMHO, a decade of poor investments, wasteful spending, etc. gives rise to true uncertainty, which we are poorly equipped to handle. It might be that the Fed is pretending to be in control.
MPO45
1 year ago
Like everything else, it depends. Inflation expectations DO MATTER to many people, specifically, the people that have the means to do something about it.
I certainly expect food prices to be way higher in the fall so I have stock piled non-perishable items such as rice and beans. I have also loaded up on meats and filled my freezer. For me, my constraints are the size of my freezer and storage area for dry goods, not really money.
For the poor, you are right, they might care about inflation but they can’t do a damn thing about it.
For the uber wealthy, what they do is buy futures contracts and make millions. The Fed knows this.
As for people that think that rents are going to go higher (yes that’s me I want to buy more), I am trying to buy more properties to rent them out. Again it all depends on your wealth and ability to buy. The Fed knows this too.
And there are plenty of videos on Youtube of people attempting to fill bags of gasoline or the back of their truck when they think prices are going higher.
In aggregate, the Fed knows all of this which I think is why they pursue these matters in the way that they do. Does any of it work? No otherwise we wouldn’t be in the mess we’re in but at least now they can say they are trying to understand the problem.
Personally, I’ve lost all confidence in gold being able to do anything useful or increase in value. There is something fundamentally wrong with gold. I still have gold sitting in a vault in one of my houses that I haven’t visited in a couple of years. It will likely sit there until I die and my kids sell it off or they let it sit there for another generation. It feels like a waste of money.
I’d much rather have dividend stocks, real estate rentals, or a boat/plane near the Canadian border at this point than gold.
As MIsh consistently points out, gold is not a hedge for inflation. I think of it as insurance of last resort. If the Fed is as competent as Fauci, stand clear when SHTF.
Insurance vs what? The end of the world? Fauci and the Fed have nothing to do with gold being a dead asset. It does that all by itself. Put a bar of gold on your kitchen table and watch it do its thing over the next 10 years.
Pay special attention to this “….increasing concerns about a possible global financial crisis…. a quarter of survey respondents, intending to add more bullion to their reserves. That’s an uptick from 21% in 2021.”
One in four central banks are ‘concerned’. Which ones? WHY?
Another person who previously said central banks are incompetent and is now a supporter of what Central Banks are doing! When did you become a big fan?
“Global central bank gold reserves top 35,500 metric tons (MT), approximately one-fifth of all the gold ever mined.
The vast majority of central bank gold holdings were acquired in the
last decade, when national banks became net buyers of the yellow metal.”
Rice, chocolate and beans have high storage costs which will eat up the ‘huge markup.’ The last thing a commodity trader wants is to take delivery. A previous partner once bought coffee futures, and had to take delivery on a NYC dock when the price moved the wrong way. OUCH
“The connection between monetary aggregates and either growth or inflation was
very strong for a long, long time, which ended about 40 years ago”.
never leaves the payment’s system (where all monetary savings originate). The source of interest-bearing deposits is other bank deposits, directly or indirectly via the currency route (never more than a short-term seasonal change), or through the banks’ undivided profits accounts. There
is simply a transfer in the ownership of existing DFI liabilities within the
payment’s system (an exchange in the counterparties of existing deposit
liabilities, a velocity relationship). There is no change in the money stock, no change in total bank liabilities, assets, or earning assets.
Savings Deposits?” Conference on Savings and Residential Financing 1961
Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43.
“Profit or Loss from Time
Deposit Banking”, Banking and Monetary Studies, Comptroller of the Currency,
United States Treasury Department, Irwin, 1963, pp. 369-386
Economics Yale theoretical
explanation was:
1961 – “that
monetary policy has as an objective a certain level of spending for gDp (sounds
like N-gDp level targeting today), and that a growth in time (savings) deposits
involves a decrease in the demand for money balances, and that this shift will
be reflected in an offsetting increase in the velocity of demand deposits,
DDs.”
Corwin D. Edwards,
He taught
at New York University in 1954, the Chicago School from 1955-1963, the University
of Virginia, and the University of Oregon from 1963-1971.
Edwards: “It
seems to be quite obvious that over time the “demand for money” cannot continue
to shift to the left as people buildup their savings deposits; if it did, the
time would come when there would be no demand for money at all”
the “monetization” of time deposits ended by the first half of 1981
words, and in May 1980 pontificated that:
into banks), will have a pronounced effect in reducing money velocity”.
finally solved BY Dr. PHILIP GEORGE
deposit insurance was reduced to $250,000:
zinger”
the drop in the unemployment rate from 8.0% to 5.0% by Dec. 2015.
If Powell wanted to stop
inflation, he would re-institute reserve requirements against his new
definition of transaction accounts (Regulation D), or what Nobel Laureate Dr.
Milton Friedman advocated, December 16, 1959. Powell doesn’t give a damn about
inflation.
rate differential in favor of the Savings and Loan Associations (the thrifts,
the nonbanks), the Emergency Economic Stabilization Act of 2008 provided a
preferential interest rate differential in favor of the commercial banks, which
induced nonbank disintermediation (where the size of the nonbanks shrank by
$6.2 trillion dollars, while the banks were unaffected, increasing by $3.6
trillion dollars). Who do you think sells the most T-Bills back to the FED?
Yeah. I figured you wouldn’t even attempt to prove them wrong. And you sounded so sure of your statement. Let me know when you can prove that the current global warming is natural. Till then, I will follow the science and ignore folks like you who want to believe it’s natural, but can not prove it.
If you are comfortable believing someone other than yourself have at it. Everyone has a book to sell… there is alot of money to be made in a false narrative, climate change, and one of my favorites,COVID.. I hope you didn’t get the jab…
range from solar activity to volcanic eruptions (such as the one in
Krakatoa in 1883 which lowered temperatures) – have seen temperatures
rise a mere 0.05C above the average from 1850-1900.
In effect, nothing.
But human activity has increased temperatures by nearly 1.2C.”
No need to worry. I always “stand clear”’of gold. But thanks for the advice.
The vast majority of central bank gold holdings were acquired in the
last decade, when national banks became net buyers of the yellow metal.”