inflation

[hardnox604008]

CPI and PPI are flatlining as the one-off effects of commodity inflation subside and the drag of wage deflation, soft demand and excess capacity continue to weigh.

But lo and behold, the magic words were uttered this morning when one of the Fed governors said that the Fed was concerned about the trend to "disinflation" and they would need to discuss "further measures" in support of the economy at the upcoming confab.

If recent experience is any guide, more QE-like intervention will merely result in hot money chasing stocks and commodities for a time (and I suspect with continued diminishing marginal effect even on those). Net to the economy, jobs and housing- a bit negative if anything as higher costs for the things that people actually buy like food and energy cut into demand for other goods and services.

But the Fed will have beaten back deflation, I guess.

[bruce MN]

There is no kudos button at the forum so I'm going to drop one on you here.  This is in excellent post, but the kudo if for this:

http://community.agriculture.com/t5/Ag-Forum/On-Romney-I-couldn-t-have-said-it-better/m-p/159419/hig...

[hardnox604008]

Thanks, I was rather pleased with myself as well although thoroughly accustomed to casting pearls before swine.

[hardnox604008]

http://www.youtube.com/watch?v=L4d6jMmKseI

For those who didn't read the fairly dense piece from Chris Cook that I posted a week ago, he's here on Keiser, begins around 13:00.

The financialization of commodities is the big story. I still struggle with understanding it and what it might mean but still convinced that it is the rosetta stone.

Cook makes mention of Mike Masters and the fact that his testimony to congress on paper commodities and dark inventory was harshly received by most of the financial world, as well as here I might add.  Goldman Sachs et al have been our friends although only for convenience' sake.

In the end I don't think it stops because anyone puts a stop to it- there is no entity powerful enough to take on these players. It stops when it uses up all its own oxygen, like subprime securitization.