That $600 B QE is going to cause massive inflation.

Post #336,527 by Another Scott 12/1/10 10:30:34 PM Reply	That $600 B QE is going to cause massive inflation. Maybe not. http://www.nytimes.c...2fed.html?_r=1&hp The European Central Bank drew the most heavily on these currency arrangements, the records show, but nine other central banks also made use of them: Australia, Denmark, England, Japan, Mexico, Norway, South Korea, Sweden and Switzerland. At home, from March 2008 to May 2009, the Fed extended a cumulative total of nearly $9 trillion in short-term loans to 18 financial institutions under a credit program. Previously, the Fed had only revealed that four financial firms had tapped the special lending program, and did not reveal their identities or the loan amounts. The $600 B Quantitative Easing plan is going to cause massive inflation just like how $9000 B turned us into Weimar Germany just like the Very Serious People said. Oh, wait a minute... :-/ Cheers, Scott.
Post #336,536 by folkert 12/2/10 5:24:44 AM Reply	Burn 'im, 'es a witch! You Heretic you!
Post #336,541 by beepster 12/2/10 8:51:32 AM Reply	Nope, nothing to see here but what do you think the continued impact will be on the developing world as food prices continue to rise 4-8% per month? http://money.cnn.com...ontrols/index.htm Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,545 by drook 12/2/10 10:01:23 AM Reply	Quit lying It's not "the developing world", it's China. The most important way international trade imbalances should be balanced is by fluctuations in currency trade rates. IOW the dollar needs to fall vs. the renminbi. That would inevitably lead to higher prices in China. But you're saying we shouldn't address a problem in the U.S. because it causes higher prices in China. Would you make the same argument against lowering the dollar? -- Drew
Post #336,552 by beepster 12/2/10 3:54:14 PM Reply	Doesn't take much to verify First question...would I react the same...no...because I think we need to lower the dollar. Second...its not a lie and won't take much for you to research that food inflation is not only a problem in China, but in the rest of the far east inclusive of India (who are actually celebrating the food inflation rate dropping to single digits (8.5%) http://online.wsj.co...052257716996.html Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,556 by Another Scott 12/2/10 4:27:38 PM Reply	Start your own thread, please. Unless you can show how Chinese companies and banks got money from the Fed, or how the Fed sets Chinese economic policy, I don't see the relevance to the Fed's actions to food inflation in China. 1) The Yuan isn't convertible. 2) The Fed pumped $9T of dollars in the system. Cheers, Scott.
Post #336,557 by beepster 12/2/10 4:30:55 PM 12/2/10 4:37:09 PM Reply	so you only care about here. and don't think anything is connected globally. All 9T of that money stayed inside the US... okee dokee skokee. Actually will grant that the 9T is not a driving cause...point is inflationary pressure is there, in food and other areas..and it won't take much improvement in growth to unbottle it. Do I think we are headed for Weimar. No. That doesn't mean that a 3 or 4 point jump wouldn't create a problem. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are. Edited by beepster Dec. 2, 2010, 04:37:09 PM EST Expand All History
Post #336,558 by jake123 12/2/10 4:41:51 PM Reply	My reading is that a three or four point jump would actually fix a lot of problems.
Post #336,561 by beepster 12/2/10 5:43:36 PM Reply	Not if we are running at a 35 to 40% clip of short term rollover on debt loads of 1T plus. And to be precise..that number is actually 60+% If we were financing all of this on 30 yr notes maybe, but... Of the marketable securities currently held by the public as of September 30, 2010, $5,180 billion, or 61 percent, will mature within the next 4 years (see Figure 3) 5.2T of the debt will need to be refinanced within 4 years. (and thats only of the amount held by public, not intergovernmental...assuming the same ratio that only makes matters worse. http://www.treasuryd...ddebt_ann2010.pdf In addition, they're selling the TIPS stuff to the public which is adding inflation risk to the government on the cost of those securities. So, a 4ish point rise in inflation..and the rise in rates to go with would drive short term debt service costs up about 200 to 250 billion per year. In and of itself, maybe no big deal...but it does make any attempt to reign things in that much harder, doesn't it...if in addition to service cuts and everything else the debt commission is proposing..you pitch another quarter trillion on top of as increased interest expense. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,559 by boxley 12/2/10 5:06:54 PM Reply	didnt know that usb and barclays were us banks Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #336,562 by Another Scott 12/2/10 5:50:57 PM Reply	Read it again, please. The Fed didn't give dollars to Chinese banks or companies. Beep bought up Chinese inflation. Your point? Cheers, Scott.
Post #336,563 by beepster 12/2/10 6:24:43 PM 12/2/10 6:25:37 PM Reply	Correction... beep brought up GLOBAL inflation highlighted by an article talking about Chinese inflation. http://www.bloomberg...ion-quickens.html Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are. Edited by beepster Dec. 2, 2010, 06:25:37 PM EST Expand All History
Post #336,566 by Another Scott 12/2/10 7:23:08 PM Reply	SE Asia != World.
Post #336,568 by boxley 12/2/10 8:07:22 PM Reply	you buy any rice lately? Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #336,569 by Another Scott 12/2/10 8:15:21 PM Reply	Last weekend.
Post #336,599 by beepster 12/3/10 9:05:08 AM Reply	When did Egypt and mid-east become SE Asia? Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,610 by Another Scott 12/3/10 9:43:29 AM Reply	Keep missing the point. China has inflation because it has many over-heated sectors. Rapidly developing countries often have inflation. This isn't the Fed's fault. Does the US have an overheated economy? No. Does the EU? Hint: http://epp.eurostat....al/eurostat/home/ Return to the topic any time you wish. It is: The Fed pumped $9T into US and some European banks and companies over 18 months. No inflation resulted. $600B in QE over 6+ months will not cause inflation either. (You admitted as much, so why do you keep throwing up red herrings?) Inflation in the US isn't going to increase until unemployment comes down substantially. Until then, deflation is the worry. Cheers, Scott.
Post #336,619 by beepster 12/3/10 11:10:57 AM Reply	No, you keep missing the point whether you like it or not, the economy is GLOBAL..and when our supplier's economies start to inflate, the cost of our stuff that we buy from them starts to inflate...or at min builds pressure. You keep linking to and supporting promoters of HUGE OUTLAYS OF DEBT to get the economy growing. What I am saying is simple. As soon as that growth begins, even at a reasonable 4-5% recovery rate..that will uncork that pressure... And while it won't be "Weimar"-esque...as you try and throw the scare tactics and FUD about...it doesn't need to be to become HUGELY expensive given the debt loads that we are ALREADY under...let alone the increases that you continue to promote. Used to be that we were only about 35% at risk on short term rollover..we're now at 61% and any new debt will increase that...as the 30 yr notes aren't greatly marketable in the current climate. All it takes at current debt levels to add 100B to debt service (current expense) is about a 1.5% change in rate. More debt, reduces that number...and over the next 4 years, even without adding a cent to current plans...we are going to add 4T in debt. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,626 by jake123 12/3/10 12:38:39 PM Reply	No, you're missing the point it's gonna suck for the people who have illiquid assets. It will help the people that don't.
Post #336,634 by beepster 12/3/10 2:36:50 PM Reply	Which one does the US Treasury fall into? currently financing out 3 years at less than a point...gets very expensive when that financing cost jumps to 3 or 4pts, or higher...let alone moving out to 10. And we must understand, this current set of rates is a historical anomaly since 2002 recession. Other than these last several years, the interest rates are historically higher...and heaven help us if we see rates unfold like happened in the Carter administration. (over double digit). Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,635 by jake123 12/3/10 3:05:32 PM Reply	Oh look! There are risks in everything we do! Seriously, beep, if you guys crash your economy you'll be so utterly screwed that nothing's going to help you. You need to fix that first.
Post #336,642 by beepster 12/3/10 4:56:00 PM Reply	Not saying that fixing isn't important but the way we fix it is...and pumping up debt so that debt service becomes a trillion dollar bill is NOT the right way. We have to make it worth while for companies to invest domestically...that includes drastic changes in the regulatory environment and in many cases (gasp) tax credits and forgiveness. Most of that happens at local level, perhaps the fed pledging support to state and local to allow that to happen more often would be a better use of capital than some of the stuff the last set of "stimulus" ended up getting spent on. AND, gasp again, perhaps defense spending should be INCREASED short term...and offset by cuts in other programs less tied to the manufacturing base. After all...we are looking for jobs. We should be focusing 110% on spending government dollars in places that create jobs...lasting jobs...not temp census workers. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,644 by jake123 12/3/10 5:02:23 PM Reply	Defence spending isn't it you really want to make a bunch of jobs? Start fixing your infrastructure.
Post #336,645 by beepster 12/3/10 5:03:38 PM Reply	Lest I repeat myself... I've been harping on that since this all began...and before So, yes, I agree. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,804 by jake123 12/6/10 5:51:05 PM Reply	Yeah I know you have would that the folks who actually have the purse strings would figure that out.
Post #336,808 by beepster 12/6/10 6:18:00 PM Reply	$1T would build alot of infrastructure, n'est-ce pas? Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,817 by boxley 12/6/10 7:28:00 PM Reply	my math gets dodgy above 1B but at 2 million a mile for roads that is 500 miles of roads Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #336,841 by folkert 12/7/10 3:59:23 AM Reply	Sorry box... $1B == 500 miles of road @ $2M/mile $1T == 500,000 miles of road @ $2M/mile. Significant difference.
Post #336,847 by boxley 12/7/10 7:54:23 AM Reply	I thout a 1T was a one followed by 12 zeros divided by 1 million a one followed by 9 zeros x 2? Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #336,856 by folkert 12/7/10 9:51:49 AM Reply	ok... 1M == 1 with six zeros 1B == 1 with nine zeroes 1T == 1 with twelve zeroes you are dividing twelve zeroes by six zeroes divided by 2 So at $2,000,000 per mile, you get 500 miles per $1,000,000,000 and there are a 1,000 billions in a trillion. So you add 3 more zeroes to the outcome. giving you 500,000. Or drop 6 zeros from both operators and you get the same result. or $1,000,000 divided by $2 gives you 500,000.
Post #336,858 by boxley 12/7/10 10:02:04 AM Reply	thx Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #336,877 by beepster 12/7/10 3:04:52 PM Reply	Right...which means we can rebuild, from scratch, the entire national highway system (more than twice)..we could rebuild the interstate system about 100 times...or just upgrade everything, inclusive of bridges etc....(think the bay bridge replacement came in about $6B...NYC bridges inclusive of T=Z replacement is about 9B... And think about how many jobs that would create... Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,878 by jake123 12/7/10 3:06:55 PM Reply	Or, it means that you could roll out a complete high speed rail system, which would have a much better long term impact on your ability to move yourselves around after oil gets too expensive to burn in cars. And make a boatload of jobs too...
Post #336,879 by beepster 12/7/10 3:08:33 PM Reply	:-) Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,627 by drook 12/3/10 12:47:30 PM Reply	Nit (not) ... when our supplier's economies start to inflate, the cost of our stuff that we buy from them starts to inflate ... ... and then people start buying U.S.-made products instead, leading to increased income -- both corporate and wages -- domestically. IOW that's what's supposed to happen. -- Drew
Post #336,632 by beepster 12/3/10 2:25:19 PM Reply	Problem the things that we get from developing world are generally not things that we make. Type of inflation identified as "cost push". Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,647 by drook 12/3/10 5:05:18 PM Reply	Not things that we make any longer If the imports cost more, maybe we would start making things again. -- Drew
Post #336,655 by beepster 12/3/10 5:43:16 PM Reply	Don't disagree... and you need to reference the posts to jake now that address the how. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,650 by Another Scott 12/3/10 5:10:28 PM Reply	Evidence, please. Yes, the world economy is global. That doesn't address the topic, though. I'm not missing the point. You haven't presented any relevant evidence. (BTW, Box is the one I've been tweaking with the INFLATION!!!!!1ONE headlines. ;-) Let's look at some real data. US Federal Spending as a faction of GDP: http://www.usgovernm...entury_chart.html It peaked at over 50% of GDP in the mid-1940s. US Debt as a fraction of GDP: http://en.wikipedia....i/File:USDebt.png Debt peaked at ~ 120% in ~ 1948. US Monthly Inflation from 1939 - 1950: http://inflationdata...ion_currentPage=5 Monthly Inflation peaked at ~ 20% in March 1947. By May 1949 it was negative. IOW, the inflation was a blip. Did the world come to an end? Was the US government unable to pay off its debts? No. The 1950s were a boom time, not one when people and the country were struggling under a crushing debt burden and high inflation. Give me some evidence from US history to support your case (which is, as I understand it: "Federal government spending and the Fed's QE are going to cause huge inflation because they can't reel it all in fast enough when the economy starts growing. We're doomed.") and we'll talk some more. :-) Cheers, Scott.
Post #336,654 by beepster 12/3/10 5:42:06 PM Reply	Don't ask me for something you are ignoring. and don't go back to the 50s for relevance. our short term debt load wasn't anywhere near these levels then. The simple math... We are currently financed at roughly 60/40 short to long (all those moons ago it was 30/70) We are 14 trillion in debt. Historic financing rates average over 5%. So... Current rate, under 1. Historic average 5%. Delta 4 points. 60% of fed debt...8.4T. 4% of that? 336B in increased debt service cost (at historical average...not inflationary highs). Can we add this to current entitlements and current govt levels and ever hope to reign in deficits? You apparently think we can. Ever the optimist, apparently..as we can't seem to tackle 20% of the economy and save anywhere near that in 10 years...let alone 1. So you either believe 1T (or higher) deficits are sustainable in perpetuity...or you're smoking something. So this is why I and others (like the rest of the G20) think that the US must tread very lightly on monetization as a means to spur growth. It will lead to quick inflation...as the pressure is already building outside of the developing nations for this to happen. These numbers are all cited or easily verifiable. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,657 by boxley 12/3/10 6:06:18 PM Reply	yes and I am biding my time for hyarge TOLDYASO! :-) Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #336,670 by Another Scott 12/3/10 10:17:23 PM Reply	Which do you think will come first? 1) Annual (Dec-Dec) All-Urban CPI change greater than 3.5% in the USA for 2 consecutive years. It last changed that much in 1989-1990 - ftp://ftp.bls.gov/pu...sts/cpi/cpiai.txt 2) Seasonally Adjusted Unemployment (LNS14000000) less than 6.5% in the USA - http://data.bls.gov/...in/surveymost?bls (it was last below 6.5% in September 2008). (In December 1990, the seasonally adjusted unemployment rate was 6.3%.) If you're worried about crippling inflation, I guess you'd pick 1 as happening before 2. I'd pick 2 as happening before 1. I don't think either one is going to happen within the next 3 years at the earliest. I honestly wouldn't be surprised if it took until 2020 for unemployment to fall below 6.5%. :-( Again, inflation isn't going to go up in a sustained way until unemployment drops significantly. Unemployment isn't going to drop significantly any time soon. (Insert Beep's comment about 3.5% inflation being a disaster, here.) Cheers, Scott.
Post #336,672 by boxley 12/3/10 10:35:57 PM Reply	no worries then obtw what is the unemployment rate in zimbabwe? Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #336,679 by Another Scott 12/3/10 11:05:01 PM Reply	Zimbabwe is different, as you know. http://news.bbc.co.u...frica/8622519.stm Wikipedia says the unemployment rate there is 94%. Which shows that Mugabe destroyed the economy, but has no relevance to what is happening in the US. Unless you'd care to enlighten me as to how it's relevant with more than snark and WND editorials. ;-) Cheers, Scott.
Post #336,682 by folkert 12/3/10 11:22:19 PM Reply	He doesn't/can't see you side... and will give up when he is losing.
Post #336,703 by boxley 12/4/10 2:51:35 PM Reply	got a pic for you greg http://images.sodahe..._poll_xlarge.jpeg Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #336,704 by beepster 12/4/10 2:56:43 PM Reply	Now boys...behave yourselves... Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,691 by beepster 12/4/10 9:23:02 AM Reply	No...3.5 is a problem 5 is a disaster ;-) Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #336,692 by Another Scott 12/4/10 9:28:46 AM Reply	<Chuckle> Correction noted.

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