Hidden Hyperinflation:creating a repulsive dollar

[BarnacleBob]

Hahaha....I got it figured out....how the Fed is covering up the inflation machine....I think! Comments Welcome....

Look at MZM and M3, they look steady flat and almost sideways, no real evidence of a massive inflation. One would logically begin looking at the monetary aggregates for signs of inflation manifesting in the economy thru traditional measures of monetary aggregate growth:

http://research.stlouisfed.org/fred2/data/MZM_5yrs.png

http://research.stlouisfed.org/fred2/data/M3NS_5yrs.png

We all know there is a massive inflation underway by the rising price levels, yet the inflation does not appear in the monetary aggregates nor is it reflected in the hedonic CPI and PPI measures. So where is the inflation coming from?

How would one temporarily cover up a massive inflationary counterfeitting scheme without the traditional monetary measures reflecting the inflationary monetary creation? The thought occured to me that simply one would grow the "temporary liquidity" as measured by the Feds "Overnight and Term RPs!"

http://research.stlouisfed.org/fred2/data/RPNS_5yrs.png

The scheme to coverup the real inflation rate would require CPI and PPI measures to be massaged by hedonic accounting to reflect the growth of the traditional measures of MZM - M3. If real CPI and PPI measures were properly reported then to many investors, namely bond investors would become overly suspicious if MZM - M3 were not rising..... the answer to the conundrum of inflating the money supply, yet keeping Interest Rates low has been to expand the "temporary" monetary aggregate measures. After all, the temporary monetary aggregates are NOT counted in MZM - M3 measures.

I seem to have stumbled over this discovery when comparing the FEDs Overnight and Term RPs charts, I quickly noticed that when the temporary liquidity began falling, so too did the Real Estate loans.

http://www.economagic.com/em-cgi/charter.exe/fedstl/realln+1947+2003+3+1+1+500+900++0

Change the date for the above chart to year 2000. The decline in RE loans is somehow directly linked to the decline in Overnight and Term RPs.

Consumer loans have also been tracking but lagging the Overnight and Term RPs liquidity injections. This would seem logical as the liquidity was fractionalized into new loans as it trickled down from the Real Estate bubble...

http://www.economagic.com/em-cgi/charter.exe/fedstl/consumer+1947+2003+3+1+1+600+900++0

Again adjust the date for the above chart to year 2000.

It almost completely comes together when comparing the Overnight and Term RPs liquidity injections with the POG. Seems like a pretty slick means of covering up the massive inflation by accounting for it as temporary liquidity.

If this in fact is what has occurred, namely that temporary liquidity from ON RP desk has been used to covertly manipulate interest rates lower creating the illusion that inflation is low and prop up the economy, I can only see a massive deflation when the temporary liquidity is withdrawn.....

"From now on, depressions will be scientifically created." -- Congressman Charles A. Lindbergh Sr. , 1913


http://research.stlouisfed.org/fred2/data/RPNS_5yrs.png

[messianicdruid]

So, how does this insight translate into your own actions over, say, the next six months? Do you keep buying PM {while feeling like a bandit} our hoard "dollars" and wait for deflation to bring down the prices, since "cash is king"? What is the "trigger" that changes you from inflation to deflation, or will you even see it coming?

[Halophyte]

How long can they keep the liquidity cat in the bag ?

.

[manu dibango]

Hi there! :wavey:
Hope you don't mind a couple of questions.
What exactly are "overnight and term RP's"?
Are you saying that the Fed increases the actual supply of money without this being reflected in the "measures" of this supply?

[Goldie]

Hi there! :wavey:
Hope you don't mind a couple of questions.
What exactly are "overnight and term RP's"?
Are you saying that the Fed increases the actual supply of money without this being reflected in the "measures" of this supply?




http://www.ny.frb.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE
http://www.ny.frb.org/markets/seclend/sec_lendop.cfm

[PONCE]

QUESTION,,,,,,, QUESTION,,,,,,,,, QUESTION.


Ok now, please keep it simple,,,,,,, most of my brain is spoken for.

Here we go,,,,,,,Japan and China give us back the money from stuff that we bought from them,,,,,,, for that money we give them X papers IOU's (bonds?).

Here is what I want to know,,,,,, suppose that tomorrow Japan and China give us back the IOU's, what do they get in return?????? more fiat money?, my first born?,,,,, what?

[PONCE]

Come on guys, I really would like to know the answer, maybe it is a stupid question for those of you educated in the way of the world but I am just learning,,,,,,,,, googoo gaga <------ my first words.

[Veli Hopea]

Here we go,,,,,,,Japan and China give us back the money from stuff that we bought from them,,,,,,, for that money we give them X papers IOU's (bonds?).

Here is what I want to know,,,,,, suppose that tomorrow Japan and China give us back the IOU's, what do they get in return?????? more fiat money?, my first born?,,,,, what? I guess they want something better than Federal Reserve Notes. Maybe they want commodities, stocks, real estate, other assets, precious metals, anything that contain some comparatively stable or improving real value.

Increasing demand for commodities means increasing prices.
Increasing supply of money means increasing prices.
That is inflation, as far as I know.

[edjerider]

Maybe you could give them some uranium in exchange, some ENRICHED uranium? :bandit:

[shades2]

Maybe you could give them some uranium in exchange, some ENRICHED uranium? :bandit:

Don't think they'd appreciate the DEPLETED kind delivered at high velocity. :bandit:

[edjerider]

I used to fry lizards in a skillet as a kid too so the thought of a "limited" thermonuclear solution to the problem of trade imbalance appeals to me. They don't have to DROP one on the population, just vapourize a few million tons of sea water in the south china sea. That'll get the message across! Japan would be the problem though, their technically an ally. :bandit:

[Walter Mitty]

To Ponce:
They get your house, when things go all to hell!

[MBAType]

QUESTION,,,,,,, QUESTION,,,,,,,,, QUESTION.



Here is what I want to know,,,,,, suppose that tomorrow Japan and China give us back the IOU's, what do they get in return?????? more fiat money?, my first born?,,,,, what?

Yup, they get more money. That's it. Which of course is part of what's so amazing...that they are willing to still buy those onds when they know tha in the long run, the paper we're gonna pay them off with aint gonna be worth all that much.

[PONCE]

Well, lets see now,,,,,,, I paid 1/4 cash for my house, that means at at the rate that the US is printing money pretty soon my house will be worth 2.5 mill maybe even five mill.

But then,,,,,, this is my home and it has no price,,,,,not even for 10 mill would I sell it.

As far as someone "taking" over my house? Mr Winchester and Mr Colt will be my bodyguards.

God bless America, but "The Force" blesses Ponce first.