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The Inflation thread


kahuna1

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The race to currency debase about to take another step forward following Japan's recent involvement in the race??

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Reuters) - The European Central Bank will monitor the economic impact of a strengthening euro, ECB President Mario Draghi said on Thursday, feeding expectations the climbing currency could open the door to an interest rate cut.After the ECB left its main interest rate at 0.75 percent on Thursday, Draghi said the exchange rate was near to its long-term average but went further than many analysts had expected.

 

"The appreciation is, in a sense, a sign of return of confidence in the euro," Draghi told a news conference.

 

"The exchange rate is not a policy target, but it is important for growth and price stability and we certainly want to see whether the appreciation is sustained and will alter our risk assessment as far as price stability is concerned."

 

The euro hit a 15-month peak of $1.3711 on February 1. It traded below that level on Thursday and fell to a one-week low against the dollar and sank against the yen after Draghi's comments.

 

French President Francois Hollande said on Tuesday the euro zone must develop an exchange rate policy to protect the currency from "irrational movements". Germany has been cooler to any thoughts of exchange rate action.

 

By linking the euro's exchange rate to growth and price stability, Draghi achieved a deft piece of verbal intervention, analysts said.

 

"This hints that euro strength -- if sustained -- could eventually trigger a rate cut," said Nick Kounis at ABN Amro.

 

Carsten Brezeski at ING added: "Draghi successfully tried to talk down the euro exchange rate and opened the door for possible policy action."

 

Last month, Draghi unwound earlier expectations of a rate cut by citing a batch of improving economic indicators. But since then the euro has appreciated further.

 

The ECB's room for manoeuvre is limited, however. Even if it wanted to, the bank's statutes mean it is ill-equipped to join a currency "race to the bottom".

 

Furthermore, the world's other top central banks are expanding their balance sheets by printing money, or at least not reversing course, while the ECB's balance sheet is tightening, partly due to banks paying back early cheap money the central bank doled out last year.

 

A by-product of that could be to drive the euro yet higher.

 

IRISH DEBT DEAL

 

Although it took no monetary policy action, the ECB and Ireland reached a compromise on a long-standing dispute over the cost of servicing money borrowed for a failed bank.

 

Dublin rushed through emergency legislation early on Thursday to liquidate failed Anglo Irish Bank as part of a compromise to avoid paying 3.1 billion euros a year until 2023 on money it took for the stricken lender during a meltdown of the main Irish banks in 2008.

 

Draghi merely said the ECB "took note of the Irish operation" but Irish premier Enda Kenny stood up in parliament and declared the deal done that could go a long way to allowing Ireland to quit its bailout program this year.

 

Draghi gave a similar view on the state of the euro zone economy to the one he gave in January. Economic weakness was "expected to prevail in the early part of 2013" but later in the year, activity should gradually recover.

 

He said the recent move by banks to pay back early about 140 billion euros of cheap three-year money the ECB gave them last year was a positive sign.

 

"This reflects the improvement in financial market confidence," Draghi said, adding that the ECB would watch to see if the money market tightened conditions by stealth.

 

"We will closely monitor conditions in the money market and their potential impact on the stance of monetary policy, which will remain accommodative," he said.

 

A Reuters poll of economists last week suggested official rates would not change until at least July 2014.

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It is always fun to look at the records of those lucky folk who absolutely know the future.

 

This is from a post on this thread made in August 2009. The quote is from Doug Casey,a bonehead who makes a living from flogging his Newsletter and appearing on U.S. Finance channels.

 

"According to Doug Casey, shorting bonds is a sure bet. ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Interest rates are going way up. Why? There will be tremendous demand for capital, of which thereÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s a limited supply. Interest rates are the price of capital. So theyÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢re going up for that reason -- and because of the trillions of paper dollars the government is creating, inflation is going to skyrocket. High inflation will itself guarantee high interest rates."

 

What actually happened? Well, when dear old Doug made the call ,10yr.Treasuries yielded 3.65%. (August 2009). Following Doug's call, Interest Rates fell consistently to a low of 1.3% in 2012 and are now about 2.0%. Anyone following Doug would have been crucified by one of the greatest Bond rallies in history. Despite this,Doug still has believers,including a few on S.S.

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  • 1 month later...

So--according to the US authorities today there is virtually no inflation--then consider this:

 

2.5 years ago I recieved a cardboard small box package from an address in Ohio--postal cost in October 2010 was USD4.80

 

Recieved this week from exactly the same Ohio adress a repeat of that package--postal cost in March 2013 USD12.75, same freightage method as before.

 

USD4.80 to USD12.75 and yet "they" claim no inflation, are we getting well and truly hoodwinked by the US administration, all this with an effective minus 3% interest rate structure plus massive debt blowouts in debt plus money manufacturing to the tune of USD85 billion every month.

 

Have always maintained that all US stats are "incorrect" :devilsmiley:

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flower,Said it before,but you have an 'interesting' mind.

Statements such as "2.5 years ago I recieved a cardboard small box package from an address in Ohio--postal cost in October 2010 was USD4.80

 

Recieved this week from exactly the same Ohio adress a repeat of that package--postal cost in March 2013 USD12.75, same freightage method as before." are the sort of thing that drives statisticians--and plenty of others to strong drink.Your statement doesn't prove anything at all about inflation. If I tell you a light bulb in the US today costs 50% of what it did 2 years ago would you be happy to conclude that there is gross deflation in the US?

 

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flower, I always look for references to John Williams http://www.shadowstats.com/ who peels away the figures as one does an onion..... <h1 style="margin: 0px; padding: 0px; border: 0px currentColor; color: rgb(0, 0, 0); text-transform: none; line-height: normal; text-indent: 0px; letter-spacing: normal; overflow: hidden; font-family: arial, sans-serif; font-size: 19px; font-style: normal; font-variant: normal; word-spacing: 0px; white-space: nowrap; word-wrap: normal; text-overflow: ellipsis; background-color: transparent; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px;" id="watch-headline-title">Dollar Sell Off Within 4 Months-John Williams... http://www.youtube.com/watch?v=O8kBDUw45uY

 

 

 

http://en.wikipedia.org/wiki/Shadowstats.com</h1>

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Your statement doesn't prove anything at all about inflation.

 

So: In front of me are two boxes of identical size weight and content.

 

No 1 box was posted from Ohio to Perth on 19/10/ 2010 and cost USD4.80 to post.

 

No 2 box was posted from Ohio to Perth on 26/02/2013 and cost USDUSD12.75 to post.

 

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If the difference of +USD7.95 in postal costs in 2.5 yrs, which I claim to be a direct result of inflation

 

"are the sort of thing that drives statisticians--and plenty of others to strong drink"----- then I have serious doubts about "others" soundness of judgement/credability---or perhaps they may just have lost their way in life or missed their true vocations which obviously should have been employment as an analyst/accountant/adviser to the FED/FOMC :unsure:

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.

I always look for references to John Williams http://www.shadowstats.com/ who peels away the figures as one does an onion.

 

"range from "deceptive" to "rigged' to "manipulated" . QED.

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Regarding inflation statistics, Williams says that some of the biggest changes to the Consumer Price Index were made between 1997-1999 in an effort to reduce Social Security outlays, using controversial changes by Alan Greenspan that include "hedonic regression", or the increased quality of goods.[4] Some other investors have echoed Williams' views, most prominently Bill Gross, who reportedly called the US CPI an "haute con job".[4] John S. Greenlees and Robert B. McClelland, staff economists at the US Bureau of Labour Statistics, have written a lengthy and detailed rebuttal to claims of CPI manipulation such as those of Williams.[5]

 

Regarding unemployment statistics, Williams argues that under President Lyndon B. Johnson, people who stopped looking for work for more than a year were no longer considered part of the counted labor force. That change dramatically decreased U.S. government reported jobless numbers, as does not counting part-time workers who are looking for full-time employment.[2] In fact, these are still tabulated and are prominently reported by the BLS, as alternative unemployment series "U-4" and "U-6".[6]

 

Regarding growth statistics, Williams reports that the official numbers for U.S. Gross Domestic Product (GDP) and jobs growth range from "deceptive"[7] to "rigged" and "manipulated".

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flower,

You say..........."the difference of +USD7.95 in postal costs in 2.5 yrs, which I claim to be a direct result of inflation"

Given that the price went from $4 to $12 in 2.5 years,you are saying US inflation is greater than 100% ! Totally ridiculous conclusion imo.(and in anyone else's considered opinion)

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Hi Flower.

 

I havent been privy to all the discussion in regard to this inflation thread, but I can advise you on the difference in postal costs.

 

I am a reasonable collector of carnival glass and carnival glass in america is relatively cheap compared to other countries (supply and demand I guess) and I use to buy on ebay from america and have it shipped over to me in Melbourne and still have a bargain.

 

Getting to my point, back in 2010 the US postal service changed it's rate for overseas shipping. This change of rate generally only applied to international shipping costs. So it is not of value for me now to purchase any carnival glass from the US unless I get it for a real bargain coz the shipping costs are now a killer. So you scenario of the difference in your package cost is due to a change of the US postal service policy, (maybe a little bit added for inflation)

 

 

cheers

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