Ah, under QE2 the Fed is buying treasuries (to lower rates and stimulate the economy). Maybe you should get your facts straight?
Of course the Fed is buying treasuries. The selling was in reference to the NY Fed's and the co-oping institutions' shenanigans. I decided to omit that side-story for clarity's sake, but 'selling' remained instead of 'buying'. Since this is ET and not an academic expose I tend not to proofread my posts to make sure that uneducated folks will not misinterpret the intended meaning. But I keep bumping into the problem that no matter how rudimentary I write there are still a lot of people here that simply do not understand. Usually they are the most vocal. Again, great catch, but the hauteur remark is not welcomed.
And gold isn't going up... And cotton and wheat prices aren't going up... And CPI isn't a joke... And Bernanke's apologists aren't complete idiots.... And there really weren't bubbles in tech or housing in recent years... Denial is so much fun while it lasts.
How do you know that the people buying gold, cotton and wheat now aren't the same idiots that were buying subprime CDOs at par in 2006 and oil at $140/bbl in 2008? What you're suggesting is that current prices of commodities are reflecting some profound truth about inflation (or, at the very least, risk of inflation), whereas other prices are bogus, wrong and to be ignored? FYG, 5y TIPS breakevens (TIPS are linked to CPI-U, not core CPI) are pricing in 1.5% inflation over the next 5y and that's a relatively aggressive estimate (a risk-neutral measure of inflation expectations, so to speak). How do you know commodity prices are right and TIPS prices are wrong?
1) We have decades of data to link commodities and inflation. No, it's not a perfect relationship, but TIPS haven't been around long enough to determine if they have any predictive capabilities. Plus, between QEs, POMO and other Fed bond-buying activities, I'm not particularly trustful of what any bond prices or yields are saying about the future. 2) The money-printing aspect of what the Fed has been doing has already been addressed here.
What was up with his quivering lip during the whole interview? Dude was so nervous I thought he was going to crack at any minute. Luckily he had the biggest softball interviewer with zero tough questions and he could stick to his script to get through it.
1) Firstly, what data might that be? 'Cause I think you're mistaken in your simplistic interpretation of the relationship. For example, what are we to make of the particularly "predictive" 2008 period of high commodity prices? Secondly, TIPS have been arnd since 1997. How much more data do you need? Do you think data from the 1700s (to give an exaggerated example) would be relevant? As to QE (POMOs are QE; there are no other Fed bond-buying activities), you can look at the ultra long part of the curve, where the Fed doesn't go. TIPS breakevens out there are not pricing any crazy inflation either. 2) I haven't seen anything addressed, tbh. I have seen a lot of incoherent ranting, but that's about it. My point is simply that you can't cherry-pick evidence in favor of your particular worldview, while rejecting everything that might even remotely suggest you might be wrong. That's confirmation bias, innit?