Krugman: Gas and Food prices have Nothing to do with FED Policy

A new generation will emerge from their pupae, but one hopes they will be a bit more cautious than the last.

 

This is the kind of goofballs we are up against on the left....They dont deal in reality.

Really? The fed has no impact on food or oil prices which are both denominated in U.S. dollars?

 

Against which currencies are you referencing the US dollar?

 

Question. Fed policy (lowering interest rates) really did not result in higher oil and food prices starting back in "03 and later.

 

Dollar index:
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From an old thread. So the big dollar drop from '00 to '05 didn't result in squat on the cotton, corn or coffee charts. Even if you use M2 instead of the dollar index, you won't get the results you're looking for.

But wait, from the Department of Facts and Reality, Huge corn deal, US frost send grain prices soaring. Shockingly, supply and demand for the actual goods and not Fed policy may have had some influence on prices.

 

So if we were to move the interest rates to 10% tomorrow the price of oil would just stay the same right? All you need to do is look at the reaction of commodities to unexpected rate changes, on any given fed day, to know that you and krugman are full of shit.

Why dont you go start another "housing rolling along" thread, that was a brilliant call right before the worst housing collapse in history....

 

Gold, silver, oil, copper, aluminum, corn, wheat.

 

You forgot the sell post right near the top. And the posts with the easy money trades that I recall doubled your money.

Why can't the republican mind process reality?

 

Cheap money forces speculative risk-taking in hard assets. Either real estate, stocks, bonds, commodities, or tulip bulbs. In 1999, cheap money found a home in tech stocks. In 2002, it was US real estate and MBS products. Towards mid '05 to current, it's commodities. Cheap money always finds a home since investors need yield and fixed income can't deliver (due to negative real rates) etc. The FED can't control which market that hot money funnels into (think first-mover benefits), but they do control whether or not asset bubbles are created, to begin with. Of course, they deny it though.

 

Here's a short read regarding gold: Unlocking the Money Matrix – The Summers Gold Price Suppression Scheme (PART 13/15)

"The next part is crucial to the plot. In 1988, a young economist out Harvard, Larry Summers wrote a verbose paper entitled 'Gibson’s Paradox and the Gold Standard.' In the paper, Summers explains that when the real interest rate is positive, the gold price will not increase and even decrease as parties will prefer fiat currency that increases in purchasing power. However, when the real interest rate is negative, the price of gold will increase as parties will seek to preserve their purchasing power. Gold serves as “the canary in the coal mine” for all fiat currencies. When the price of gold rises, this is the prime signal that the currency is being debased."

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Fed operations and gold are linked but not other commodities.