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VOLATILITY?

By Pete Moore On October 27th, 2011

News is out that the American economy grew in the third quarter, up from 1.3 per cent in the second quarter to 2.5 per cent in July-September.

All those experts who extended the lines on their charts and forecast a double-dip recession for later this year will now be rolled out to say what GDP growth means. Keynesians, on the other hand, will be rejoicing that the ‘animal spirits’ which they believe to underpin any economy are revived. You might recall, dear reader, that someone (modesty forbids) suggested that there would be no double dip recession later this year in the US and that, instead, there would be inflationary growth. It was all quite easy to see because Ben Bernanke has been printing money at almost record speed:

In short, it shows the new money being pumped into the economy. The Austrians saw this coming but then they’re amongst the few economists who watch money supply. So there’s no immediate risk of recession. In fact it heralds yet more (price) inflation next year when the full effect of that money hits. This comes after a collapse in the money supply early in 2010 and the chaos that caused in currency, stock and commodity prices. Come 2011 and it’s a volte-face and printers back on to ramming speed.

No-one should be surprised that markets struggle to achieve price discovery. All this volatility is inevitable because the Federal Reserve prints money like mad, shuts it off and then prints like mad again. Volatility and chaos is inevitable.

36 Responses to “VOLATILITY?”

  1. But the Austrians also predicted hyperinflation and there are zero signs of that in any sector

    How could they have been so completely wrong on that one?

  2. Phantom,

    No inflation? – have you seen a average families grocery bill lately? How about the price of gas? and that ultimate gauge – the exchange rate, down against most major currencies.

    It might not be hyper inflation – yet, – but give it time, Zimbabweian levels are just around the corner.

    How can anyone be so naive on that one? thinking you can just print money without devaluing the currency overall, and thereby increasing the price of imported commodities.

  3. Phantom –

    Much of the hundreds of billions which bailed out Wall Street banks is being ‘on reserve’ at the Federal Reserve picking up interest at 0.25%.

    Already that which has leaked out, plus M2 growth as you see above, has caused chronic price inflation. This year’s M2 hasn’t properly hit prices yet but will do next year. However, if those many billions being held on reserve are unleashed into the economy, invest in wheelbarrows.

  4. I didn’t say that there was no inflation, grasshopper.

    But you guys were predicting wild Zimbabwe inflation two years ago, and there are no signs of it.

    And the dollar-Euro exchange rate, despite fluctuations, is roughly where it was was in late 2008.

    And that’s the most important ratio. That and the exchange rate with China. The rise of the gold price doesn’t mean anything.

    We won’t see Zimbabwean inflation. Trust me on that one.

  5. Above aimed at Ernest

  6. zero signs of hyper inflation?

    gasolene is up 120% meat is up 250% dairy is up 200% yeah inflation isn’t there if you don’t eat or drive.

    We are in a depression PERIOD. 18 MILLION ARE UNEMPLOYED, 16 MILLION ARE UNDER EMPLOYED. Thats for a longer period than the depresion of the 30s. Housing reposesions and defaults are also greater than that depresion.

    45cents of every dollar the government spends is borrowed.

  7. gasolene is up 120% meat is up 250% dairy is up 200%

    Who says meat and dairy are up that much? From when?

    As respects oil looky here

    When you look at the 5 year average for West Texas or for Brent, its stable enough and nowhere near 5 year highs. It is interesting that oil is nearly $20 a barrel cheaper in the middle of the country than in the Northeast.

    My local Key Food supermarket sells 12 can packs of Budweiser for $11.99, about the same price as 2008. The economy isn’t all bad.

  8. no go back to when El Duce took office, with full control of the house and senate for two years. The inflation rates are since then.

    Oh and Phantom we still drill some of own oil in the middle of the country, and would drill alot more if this ass was out of the white house

  9. We do drill a lot still in Texas / Louisiana, and with the Canadian production where it is once the XL pipeline is built, the middle of the country will be in good shape for oil for a long time to come

    The problem in the East includes the fact that Florida and other states want no part of offshore oil drilling. The East has loads of natural gas, but not so much oil and unless you want to override the states, you won’t see that oil developed.

  10. ‘I didn’t say that there was no inflation, grasshopper’

    No, but you did say there was no signs of hyperinflation.

    How do you think it starts? – it starts as inflation, and we certainly have that, – and it grows from there. Germany pre war, it started as inflation and took four or five years to become a disaster, same with Zimbabwe, – it neither case did happen overnight, and that is the danger, once started it becomes very difficult to stop.

    That inflation is any governments favourite way to reduce its debt burden, as a virtual devaluation, ensures that they will continue to dabble with seeing just how much they can inject into the economy without completely destabilising it.

  11. There are not even the first signs of anything that will ever lead to hyperinflation

    The US and other countries were afraid of deflation, not inflation.

  12. Yeah! – that’s why interest rates are the lowest they have ever been!…

  13. define for us what you consider HYPER inflation. I need a laugh

    and Yes Phantom the states will be over ridden when it comes to the issue of oil, but long before that happens oil will drop tremendously the day this ass is out of the white house.

    When Obama took office there were over 200 productive wells operating in the Gulf, today there are less than 10. The new rich field in the dakotas has not even been brought to 10% of production yet.

    The Dems stopped the Canadian pipeline which will also be put back on track. This is a Democrat/Liberal/Communist self inflicted massive depression that can be turned around in a few short months

  14. Awesome, not only is it a massive depression, it can be turned around in a matter of months. Quick get your magic wand.

  15. Hyperinflation?

    Lets just say it’s more than 3.87%

  16. that magic wand is called FREEDOM, CAPITALISM, MARKET DRIVEN ECONOMICS.

    Try it, you’ll like it.

    It took less than 18mths to Regain everything Carter F**ked Up, this is no different

    Like that Regain=Reagan…lol

  17. Phantom so is the current REAL rate of inflation

  18. hey Mahons what do you call 40million people either out of work, or under employed?

    I guess since you have a job it…. Whats the Ole saying, when my neighbor loses his Job and House it’s a recession, when you do THEN it’s a depression.

    The numbers don’t lie even if you view them through a frosty mug of bud

  19. It depends on what you’re buying

    If you’re buying a big screen TV or a house you will pay a lot less than you’d have paid in 2008

    For most purchases , the inflation year over year has been quite moderate

    And nearly every consumer product you buy in the US is cheaper than the same thing in Europe, as our travelers will attest.

  20. Troll – it isn’t a massive depression. Though I certainly encourage anyone to view it through their drink of choice.

  21. Phantom not everyone buys a big screen TV, or a house. We all buy food and gas. and back in the days of Carter an Reagan they were the two number one markers of inflation.

    They still are except SMART people like you don’t count them anymore.

    Reality is to much I guess for both you and Mahons…lol

  22. Troll – reality is something you do not seem aquainted with or burdened by.

  23. As I’ve shown you, the price of oil has been relatively stable over five years, and is below the five year high everywhere, especially in places like Texas where it’s relatively cheap compared with the rest of the country.

    There is inflation in food, which is partly due to the harebrain ethanol program. Let me know how many Iowa/Kansas Republicans oppose that scam.

  24. Troll

    Move to NYC and you won’t need to buy any gas. You can sell your car and then ride the subway day and night at low cost. Come on up, you will love it.

  25. Phantom your either an idiot or a purposful distorter of facts which is it?

    The price of a gallon of gas when obama took office was on average $1.80 it is now $3.40, the production of domestic oil has decreased over 30% in the last 2 years. Yet I guess you want to repeat the standard Democrat line that it’s price gauging by the Oil companies I’m sure. Except they had that hearing last year when gas was $4 a gallon and what do you know Congress found no price gouging.

    As for living in NYC, no thank you. You see you live in that bubble where people don’t even own cars.

    Me like 99% of Americans over the age of 16 love our cars and trucks, and would only ride public transportation as a last resort in a matter of life or death, but you can’t grasp that simple fact can you?

    I also would not live in a city that tells me I can’t salt my food at a resturant where I’m paying for the meal, let alone one that bars me from my second amendment right to bear arms.

  26. Troll since you claim to be in the 99% perhaps you would be happy with the OWS movement.

  27. eeeewwww low blow….lol

  28. Troll

    How could oil production be the cause of an 89% run up in gasoline ( petrol ) prices when the price of crude via the Brent measure is up ” only ” 66% in the same period? And where the price of crude in West Texas is LOWER or the same as it was in January 2009?

    See the charts, pal. This and any and all other oil industry choices will show the same numbers. Sorry to bust you again.

    – – –

    Eh.

    I own a car, as do a big percentage of my NYC cronies.

    I can salt my food in a restaurant all I like, though I haven’t done so in 25 years since restaurant food is jam packed with salt to begin with.

    And I could get a gun for home use anytime I chose to get it. I don’t bother with it because I live in a safe area and I’m not afraid.

    BTW, I know a bunch of people in the Philly suburbs, and to my knowledge none of them owns guns either.

    You continue to have a .000 batting average when discussing crime, politics and the economy.

  29. Phantom you live in a bubble

  30. A safe and relatively prosperous bubble, yes.

    Find one error in what I just said.

    Your meat and dairy comment is untrue. Consumer prices have not gone up anywhere near those percentages. You just throw untruths out there like your little buddy in California and think people are foolish enough to believe it. You are a true representative of the Republican base.

  31. sorry Phantom calling me a liar doesn’t make your statements true nor mine false. If you take the time to check you would find as usual my figures are correct, and as usual prove that your view is very geocentric. For someone who travels as much as you, you are not worldly except in your own little world your statement about your friends in the philly burbs shows that.

    In 4 weeks 10.1 million deer hunters will enter the woods in the United States, just to shoot Bambi, 750,000 in Pa. schools will close in over half the state due to lack of students on opening day. It hapens every year.

    10.1 million that’s the number of Deer Licences sold last year.

    Pennsylvania alone in one day will have more men under arms than Iran, France, and Germany combined all deployed to the woods of a single American state to help keep the deer menace at bay.

    Ever been hunting Phantom?

    and Deer hunters make up only approximatly 10% of gun owners in the US. Whose the minority Phantom, you or me?

  32. I’m sitting here watching this spat between Phantom and Troll – two guys on a sinking ship arguing over the price of a TV. However, I must agree with Troll’s comment that Phantom lives in a bubble, a “safe and relatively prosperous bubble” and so everything is fine for Phantom. That sums up Phantom and all others who work in the ‘financial sector’.

  33. For our US readers….
    Gosh imagine the reaction if gas hit five bucks a gallon over here in the UK…..

    Wild jubilation I expect.

    Since that would mean petrol had fallen from £1.36 a litre to a mere 82 pence.

  34. Allan- all others who work in the financial sector.

    Yes so far so good for me. But Companies can go bust you know. Nothings 100% certain.

  35. Troll

    Maybe you should spend less time hunting and more time looking for a job.

    And you’ve still not disproved one word I’ve said here. Have fun in the woods.

  36. ah and you have proven nothing, hell you haven’t even tried. It must be nice to live in a world where you the only source you credit is your own mind…lol