borodog's mistaken understanding of M3...don't listen to his drivel

[Orlando Salazar]

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arguably, for those that consume in US dollars, a weaker currency does little to alter their standard of living.

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Cause all goods Americans consume are produced in the US, right?

[DcifrThs]

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arguably, for those that consume in US dollars, a weaker currency does little to alter their standard of living.

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Cause all goods Americans consume are produced in the US, right?

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nope. but overall the effect is minimal on those who consume in dollars. corporate profit margins change by way more than consumers' lives are changed.

inflation in terms of price increases on the stuff we (in the US for example) buy on a regular basis is definitely a problem if it gets out of hand. despite the govt's 'manipulation' of CPI (mainly by choosing not to use the 'clinton era' version of it that takes about 3% points off), flows through to CPI are definiltey indicitive of price changes. but we haven't seen massive inflation in the past.

it may be that we are now at the turning point and the inflection will dislodge the current system or plunge us into a type of stagflation. another outcome is that we lumber along and continue distorting one asset price after another.

asset prices aren't in the CPI though (other than housing and some commodity prices) and this distortion is definitely noticeable...though from the fed's perspective, it is tough to be a pricker of bubbles though some are pushing it that way. unlikely it'll happen...

one interesting thing that may be happening that dampers the effect huge increases in M2 has on real economic price changes is that the excess money flows to investments rather than goods and services so the prices of them may not reflect the "true" inflation if asset prices are all taken into acct.

one thought is that money supply has been increasing at a very fast pace for a very long time and US prices haven't received the push they should given the expected flow through. we should definitelyb e seeing increases in CPI that we haven't had all that money poured into the economy and was searching for a home, right?

Barron