[DcifrThs]

here's another thought or two:

one thing that doesn't sit well with me is the availability of this info. now i'm not an efficient market type but i do believe that markets, though beatable, are a very good barometer of opinions/estimates. your ability to come up with ones that are better than the consensus and your ability to manage those bets determine your ability to add alpha imo.

so then, if this info is so readily available (i.e. boro had no trouble getting it) and the implications so clear (as again has been outlined despite my thickheadedness in some areas) why has virtually none of it been discounted (taken into acct) by the markets.

for instance. if inflation is so much higher than it is reported in CPI, the necessary yeild on TIPS would be much higher since CPI wouldn't near compensate you for the reduction in purchasing power you'd acheive as a result of said higher inflation.

further, treasury bonds should be trading at a huge spread to TIPS as break even inflation (though it hasn't proved to be an accurate predictor of future inflation and in some cases seems to adjust retroactively) moves up substantially .

additionally, since individual's purchasing power has fallen, and is thus predicted to fall so much, other market based economic indicators (equity futures & spot prices etc.) should at least in some part have reflected this over the past 2-6 years, right? specifically, if you loko at a chart of the 2yr and 10yr you see that since the last recession in 2001, short rates have risen dramatically while long rates have remained virtually unchanged (again prior to june 2007). this is indicitive of inflation expectations being anchored amazingly well.

instead, what have we seen? low interest rates and global liquidity feeding asset price increases. but in addition to those low interest rates (or perhaps b/c of them) we've seen consumer purchases and the like increase dramatically both domestically and globally. so where has this decreased purchasing power gone?

where are the effects of inflation? and why haven't they either 1) reduced consumer demand for the goods and services being inflated OR 2) been discounted by the markets by any stretch of the imagination over the past number of years?

for instance, the excess liquidity globally had to find a home, but the home it chose seems to counter the logic of the readily available info boro has provided.

so either the market is absolutely dead wrong, the information is correct yet the conclusions from it are incorrect, or some combination of the two.

historically though, threats to inflation have moved markets substantially (before the 1980s) and they seem to be good at sorting out what is and what isn't good information.

you can counter well it is manipulation so markets are fooled. but the evidence of the manipulation is public. look at banks/fin services etc. they kept their exposure fiarly secret (certainly not public or easily obtainable) but when lossese surfaced, markets reacted.

the OP by borodog imo amounts to the "surfacing" of this info yet there has been no reaction by markets (and talking pre june 2007 here).

thoughts?

Barron