cotton,,,errol,,,others

[ajl]

We do have inflation in some part of the
economy currently along with deflation in
some others. The price of farmland is an
obvious example. There is also lots of
inflation in anything tied to government.
For example a report out put the cost of
the average Federal bureaucrat at $114000
per year. Costs in health care and
education in this country are spiraling
upwards.

[ColevilleH2S]

<a href="http://web.mit.edu/krugman/www/deflator.html">Liquidty trap</a>

It is one page of light <font size="1">(hehe)</font> reading, with equations and graphs. Basically discussing deflation, and how it could be fuelled in today's environment.

[rhoff]

Coleville that was an Intresting article and a
worthy read. I guess one of my opinions is that
the US will be completely unlike Japan for two
reasons. 1 is they have a propensity to spend
rather than save. 2. The US actually has a strong
rate of family formation and immigration which is
why demand growth will be constant.
If you consider Japan's birth rate and immigration
policy it has pretty much turned that economy into
a vacuum. I guess another factor is that Japan's
national debt is financed mostly by its own people
unlike the US who are the worlds biggest debtor
in history. I'm always amazed at how willing old
Japanese people are to save at incredibly low
yields lending money to governments who are
profligate spenders.

[cottonpicken]

If the japs interest rates move up a couple
points,100% of tax revenue will go to interest
expense alone.

It is a full on utter wipe out,they are insolvent and can
not fund themselves.

Mentioning the 30's compared today is more than
bizarre.

The dollar was tied to gold and the debt levels and
entitlements are a non comparison.

I won't even go into social attitude.

If you get to the understanding that the debt can not
be paid off you may realize goods and services may
continue to inflate.

[cottonpicken]

I've been try ing to buy credit default swaps on japan
but have not found a way in,they are reserved for
institutional investors,i thought an etf would
eventually pop up,but no such luck of course the
chance of them paying out at the top is about 0,those
institutions that sold them would/will be instantly
bankrupt so rules would be changed.

I imagine this is one of the monstrous problems
facing the system,there really is no insurance on all
the debt,that write down alone renders all western
banks and some hedge and pension funds insolvent
as well.

[LWeber]

TD Securities

Fed outlines extension of QE3. MBS purchases of $40B a month will be continued, and $45B of Treasury purchases,
all financed through balance sheet expansion. Total QE rises from $40B to $85B a month (as expected) as the
$45B under twist now financed by QE.
ƒnThere was no timeframe. Open-ended QE looks even more open-ended. Buying will continue ¡§if the outlook for the
labor market does not improve substantially.¡¨
Numerical targets to benchmark progress were also released, one or two meetings sooner than expected.
Inflation target rose from 2% to 2.5% and the unemployment target was set at 6.5%. If the Fed was going to err it would be on the side of too much rather than too little, and while the numerical monthly allotments matched our expectations, the balance of Fed actions tilted toward more rather than less:

First, numerical targets illustrate the bias is toward getting more inflation. Raising the inflation target to 2.5% is a tacit admission that risks remain skewed toward disinflation and policy will remain focused on juicing up the growth mandate. The unemployment rate target of 6.5% is at the top end of the 6% to 6.5% we expected, but is sufficiently low to be bullish for bonds. Moreover, hitting 6.5% does not mean the Fed will tighten, it is only a benchmark. Policy will remain as much art as science.

Second, this is the first time the Fed has done QE without a specific time frame. In being tied to economic outcomes on jobs and inflation, QE could last 2 months or 22 months. This is very dovish and represents a big step in the maturation process of QE, the policy tool left at the zero-bound. ¡§Substantial improvement in the labor market¡¨ is likely viewed in sustained job growth at 200k, or more. The emphasis here is on jobs not unemployment. Lower unemployment rates driven by falling participation rates will not diminish the appetite for QE. That doesn¡¦t mean they won¡¦t adjust the size and composition of their purchases, they most certainly will, but the intention is to show the Fed is in for the long haul. How this program will evolve will depend critically on how Washington achieves a fiscal fix. If the Bernanke put was implicit it is now decidedly explicit. The chart is emblematic of the output gap the Fed is trying to overcome, and why their base view is that inflation is likely to remain below the target rate for some time. We need to invent a new word to describe the Fed, perhaps militant dovish?

We expected the appetite for QE to diminish in QE3 2013 as we begin to generate 200k jobs a month.

The meeting today suggests QE may now continue even longer.

[cottonpicken]

It will continue forever,oh well i just made a shitload
of money in a few seconds.

[LWeber]

http://barchart.com/chart.php?sym=DXY00&style=technical&template=&p=I& d=L&im=1&sd=&ed=&size=M&log=0&t=BAR&v=0&g=1&evnt=1 &late=1&o1=&o2=&o3=&sh=100&indicators=&addindicato r=&submitted=1&fpage=&txtDate=

[LWeber]

Sorry...didnt mean for the page to go off the end of the world...

Canadians got through their BS by 60-80 cent dollars for 10 years and exported their way out of the Trudeau/Mulroney mess...

The U.S. better laugh at Greece...

[ColevilleH2S]

Anyone heard of the <a href="http://seekingalpha.com/article/1054491-the-trillion-dollar-coin-idea-beyond-stupid">trillion dollar coin</a> idea? LOL