2% is a very inflationary interest rate, whether or not the money is being lent to consumers the money is getting out there. The money pump is working just fine. Why do you think the stopped publishing m3 a couple years back? Because the money supply is going even more parabolic. Of course the ones who benefit are the investment and commercial banks, who are making a killing borrowing at 2% and investing no risk in bonds yielding 4%. This is all at the expense of the American people, especially the poor. Have you been food shopping? Everything is soo much more expensive. \scexglobal, watch these videos and tell me what you think. http://www.chrismartenson.com/peak_oil http://www.chrismartenson.com/exponential_growth http://www.chrismartenson.com/inflation
Be happy to respond! 1. Population growth: There is every indication that the population may not continue expanding as rapidly as it has in the past. Look at the level of obesity. People are literally developing into bubbles. He makes the case that standards of living will go down. That however also implies that people might not live as long as they once did, as they won't have access to high quality health care and food. 2. Inflation "Inflation is always a monetary phenomenon" Completely false. There is such a thing as demand driven inflation. In the case of the current rise in commodities it is closer to perceived demand driven inflation. Hedging against inflation is a bit of a self-fulling act, since it drives up commodities, which in turn create more of an incentive to hedge. He compares inflation during the early US period. Is a loaf of bread really more expensive today than it was in 1670? I think it makes all the difference if the money gets to the consumer or not. It can even be argued that the M3 supply figure it not the most important one. The currency component has actually caped! My point was that the same is happening in other countries. The money supply in NZD and AUD is rising exponentially. And even more so in emerging economies. Housing was really the first indicator of deflationary action in the U.S. economy. Then stocks, now commodities. All this is simply following the standard economic cycle. The credit crunch is also a deflationary indicator, as it really means that the expansion that started in 1982 is coming to an end. 3. Peak Oil. Higher oil prices are an incentive for producers to get more oil onto the market and since this hasn't happened we are peaking? False. We are dealing with an existing supply crunch above ground. The perception among oil suppliers was that if they are redeemed their oil for USD, they would be loosing money due to the falling dollar (this is starting to change). So they held their long oil positions against the USD.
Also, inflation in Europe if very high. Food in fact is sky high! If inflation is only monetary, then Europe is inflating the monetary supply rapidly just like the US. So, under these conditions, how would the EUR necessarily rise against the USD? Said differently, why would the USD plummet against the EUR? See the logic? I am not denying that an energy crisis could occur later on, but the next 5 years the USD will strengthen, not weaken. After that we'll see.
One last thing: He mentioned that the housing bubble is bursting right now. Actually if burst in August 2005. 3 years too late...
you may get some sort of a reprieve today. CF was initiated with a buy. MON was upgraded;that will lift the sector a bit and the chineese dollar is getting hit this morning.
<b>1)</b> "dont fight the trend" I think the graph speaks for itself. <b>2)</b> I agree, inflation is not always a monetary phenomenon. For example the fuel-shortages of the 70s and the resulting inflation had nothing to do with an increase in the supply of money. However there is a strong case that this most recent inflation is a monetary phenomenon. At the beginning of the year, Bernanke said he would hold interest rates steady. This gave speculators an excuse to buy commodities, since they knew that holding low interest rates would be inflationary. What did this accomplish? A)$147 oil which drove us into a deeper recession B)very high prices of all other commodities, greatly exacerbating world wide inflation C)due to high inflation, the credit markets actually seized up further, it is now actually more expensive to get a loan than when interest rates were 4%. If you want a 15 year mortgage lenders want to be paid back with interest + additional $ to make up for high inflation, resulting in high mortgage rates In other words, the fed made things alot worse for the entire world. <b>3)</b> Peakoil will eventually cause SHTF scenarios everywhere. The world oil supply is expected to remain extremely tight until 2011, when it will actually decrease. This is majorly not good for our way of life, our currency, etc, etc. Once the world realizes that the world oil supply is declining, it will try to combat it a few ways: 1) Drill, drill, drill. 2) Massive tar sands exploitation, see Canada. Sucore ticker SU has already built the largest industrial wasteland in the planet near Alberta. This will only increase global warming. 3) Massive coal liquefaction. 4) Running our cars on cng. All of the above will just extend the peak and make global warming worse. The world will have to come to use vastly less energy. The prospects are slightly better if obama becomes president, but neither can stop what is about to happen.