Injin Posted February 26, 2009 Share Posted February 26, 2009 You guys who equate money supply with inflation are aware of the equation:MV=PQ Please tell me you are. Sure. It doesn't take into account all the price fixing of course, nor does it change any increase in the amount of money being inflationary. "But what if they print a gazillion pounds and bury it in a field!!111" Then the money supply increased by a gazillion pounds. Get over it. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 Actually, is this right EDM? I know we import 40% of our food. This is further complicated by the fact that we have to import the vast majority of the fuel and fertilizer we need to maintain the 60% we produce for ourselves. Yes it is right, but 10% is high. Quote Link to comment Share on other sites More sharing options...
uncle rogi Posted February 26, 2009 Share Posted February 26, 2009 Yes, I still haven't done this yet. everthing else aside for the moment, let me just make this one point, in order to actually have a proper debate it is a requirement for both sides to at least take a look at the other sides evidence is it not ...? therefore watch the film for the love of god man....you cannot hope to understand the full case without at least looking at the evidence. watch it, consider historical precedent ,think a bit etc then render an opinion. at this point mate not doing so is the same as sticking your fingers in your ears and humming. I.O.U.S.A 30 min version. Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted February 26, 2009 Share Posted February 26, 2009 I wouldn't hold cash - I'd convert it to goods very fast.I'm not so worried about a gradual increase in inflation as a sudden increase exacerbated by panic buying leading to shortages. Sure, such a panic could be contained but on the other hand it could spiral out of control...... As for why not panic now, - well, that wouldn't be panicking, would it? It would be planning, hedging one's bets, etc. And I am not yet certain enough to back my suspicions. Thus, I'm all for a quick panic - so long as I can panic first! I like the logic....You and me both...... Quote Link to comment Share on other sites More sharing options...
cht Posted February 26, 2009 Share Posted February 26, 2009 Sure. It doesn't take into account all the price fixing of course, nor does it change any increase in the amount of money being inflationary. "But what if they print a gazillion pounds and bury it in a field!!111" Then the money supply increased by a gazillion pounds. Get over it. I knew you would be aware of the equation Injin, but then you yourself said you're not a goldbug. Have you taken into consideration that the recent spike in money supply from CBs has been in response to a serious contraction in monetary supply by banks? Quote Link to comment Share on other sites More sharing options...
grumpy-old-man-returns Posted February 26, 2009 Share Posted February 26, 2009 It seems not to be generally known on here that in 1933, Roosevelt issued executive order 6102 GOLD CONFISCATION DECREE, whereby the entire population were ordered to hand in to the government all gold, including coins, above the aggregate value if $100 then. If things got to a bad enough mess this could be repeated again and in this country. Anyone who had purchased it legally could be traced, and anyone trying to exchange it or spend it could be likewise. This was without compensation and for the good of the country, they said. Gold in my opinion , in the light of what could happen is only a hedge against inflation, and not a 100% gaurantee against complete monetery collapse. yes, fair point on the confiscation point. One we have considered before. Your last point however is completely wrong. GOLD would be one of the only guarantee's against complete monetary collapse. As long as you can keep it hidden. If/when we get to that stage then surely holding pieces of paper or binary digits on a server would be far worse. 40 years of working to have the reset button pressed & it dissapears overnight. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 man in the street necessities was being talked about, not beamers and hd tv's but food and bills. john major said real rate was 9% then in october. man in the street necessities was being talked about, not beamers and hd tv's but food and bills. john major said real rate was 9% then in october. But "the man in the street" consumes a lot of things – including (often especially) tvs. The other point worth remembering is that the price you pay of an imported product is not the same as the import price. So, if you buy a banana for 30p (or whatever – I have no idea) and the value of sterling falls by 20%, and the exporter does not change his price in his home currency, it still doesn’t mean that the banana now costs 37p, because the price it was imported at was likely to have been more like 7p, so even if no one compresses their margins on an absolute basis all the way through the chain (a very big if that in the current climate), that banana now costs 31p a rise of 3%. The point is that whenever we are buying an imported product we are really buying a load of domestically-generated distribution services plus an imported product. In something like a cup of coffee, the difference is enormous. Quote Link to comment Share on other sites More sharing options...
Injin Posted February 26, 2009 Share Posted February 26, 2009 I knew you would be aware of the equation Injin, but then you yourself said you're not a goldbug. Have you taken into consideration that the recent spike in money supply from CBs has been in response to a serious contraction in monetary supply by banks? Yes, but I don't think that money was ever there. The banks were engaged in a massive fraud, and now they have been caught out, they have got the government to actually create the money - which is inflationary. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 might be best to wait 'till others are panic selling Erm, no, it is always better to panic first if that is what is going to happen. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 sorry, my apologies EDM, that was uncalled for. I am just SHOCKED you are still in the denial stage tbh. I assume you have sterling in the bank & have bought financial stocks OR you are 24 years old having just finished an economics degree & in your first proper job ? Apology accepted. But what does it matter what I have done or what I have not done? Either I am right or I am wrong. If you think I am wrong - point out in what way. Just saying that I am "in denial" is absurd. Quote Link to comment Share on other sites More sharing options...
grumpy-old-man-returns Posted February 26, 2009 Share Posted February 26, 2009 Erm, no, it is always better to panic first if that is what is going to happen. depends on how you are positioned right now though doesn't it. for some of us what has happened & what is about to unfold is in slooooooooooooooooooooow motion. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 See, I can admit that this is mildly amusing rather than saying that anyone lacks credibility because the lighten things up a little. Actually it was a serious point - if you think everyone is going to panic, then you should panic before them. Quote Link to comment Share on other sites More sharing options...
cht Posted February 26, 2009 Share Posted February 26, 2009 Yes, but I don't think that money was ever there. The banks were engaged in a massive fraud, and now they have been caught out, they have got the government to actually create the money - which is inflationary. That's fair enough. Can we just disagree, my beef is with the Goldbugs who haven't a clue what they're talking about. Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted February 26, 2009 Share Posted February 26, 2009 I like the logic....You and me both...... Thing is, Steve, and maybe what EDM doesn't fully appreciate, is that I am just an ordinary bod but hopefully just a little bit more informed than the man on the street; but I am NOT a financial whizz, or a seasoned investor, or a trader. I am just one of the financially unwashed who has maybe made a little effort to scrub the dirt from under my fingernails - but that's about it. But it is the likes of me, and those even less informed, who represent the majority and whose actions will therefore have the greatest effect - at least, that's how I see it. EDM may very well be right, in a purist sense, but that doesn't mean that his predicted outcomes are more likely because confidence, which is what moves markets, has little to do with purist calculations and everything to do with herd irrationality. And I reckon that as one of the herd I'm probably better at predicting what the herd might do than EDM who is far too knowledgeable to behave in the irrational way that herds behave. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 not reading all this thread but the answer to protection against inflation (debasement of the currency) Gold % Annual Change GBP 2001 5.4% 2002 12.7% 2003 7.9% 2004 -2.0% 2005 31.8% 2006 7.8% 2007 29.2% 2008 44.3% Average 17.1% Well done, you've explained what has happened to gold prices. What is going to happen in the future and why? Quote Link to comment Share on other sites More sharing options...
grumpy-old-man-returns Posted February 26, 2009 Share Posted February 26, 2009 Apology accepted. But what does it matter what I have done or what I have not done? Either I am right or I am wrong. If you think I am wrong - point out in what way. Just saying that I am "in denial" is absurd. I was not trying to be patronising, I was being very serious. I assumed you were more ahead of the game tbh, after reading your stuff from 2007/8. I reckon I am right wrt to your current situation though with my latter guess. you NEED experience in a situation like this because you also need gut feeling, you can't learn that from a book or stats. Quote Link to comment Share on other sites More sharing options...
Injin Posted February 26, 2009 Share Posted February 26, 2009 That's fair enough. Can we just disagree, my beef is with the Goldbugs who haven't a clue what they're talking about. Sure. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 That doesn't mean that the non-vocal majority cant sort the wheat from the chaff. I for one value your posts immensely EDM. Thanks for the kind words. Quote Link to comment Share on other sites More sharing options...
cht Posted February 26, 2009 Share Posted February 26, 2009 Well done, you've explained what has happened to gold prices. What is going to happen in the future and why? and timed his list from the last trough, like any good ramper does. Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted February 26, 2009 Share Posted February 26, 2009 Well done, you've explained what has happened to gold prices. What is going to happen in the future and why? they will go higher because sterling is being printed into oblivion (but I'm sure you could have worked that out yourself) Quote Link to comment Share on other sites More sharing options...
crispindry Posted February 26, 2009 Share Posted February 26, 2009 Erm, no, it is always better to panic first if that is what is going to happen. I paniced last night and bought 2 ten-kilo sacks of rice....now my missus knows I'm nuts. BTW Lidl ravioli was 89p last week now 99p. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 I wouldn't hold cash - I'd convert it to goods very fast.I'm not so worried about a gradual increase in inflation as a sudden increase exacerbated by panic buying leading to shortages. Sure, such a panic could be contained but on the other hand it could spiral out of control...... As for why not panic now, - well, that wouldn't be panicking, would it? It would be planning, hedging one's bets, etc. And I am not yet certain enough to back my suspicions. Thus, I'm all for a quick panic - so long as I can panic first! Ah, so the probability you ascribe to this happening is still quite low, and you will react to evidence which raises that probability. Then, I am the same - we agree. Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted February 26, 2009 Share Posted February 26, 2009 and timed his list from the last trough, like any good ramper does. or from when he started buying it, as a good investor would have Quote Link to comment Share on other sites More sharing options...
Guest Steve Cook Posted February 26, 2009 Share Posted February 26, 2009 (edited) I knew you would be aware of the equation Injin, but then you yourself said you're not a goldbug. Have you taken into consideration that the recent spike in money supply from CBs has been in response to a serious contraction in monetary supply by banks? Yes it has been in response to a contraction in supply by the banks. however,I would argue this contraction is as it should be. It has contracted for a reason. That reason is because the real economy has contracted and there is no longer the economic need for this money. The reason the banks won't lend it is because they also know this. They are finally, (belatedly) only too aware that if they lend it out they will lose it because people will continue to default. Money is the final abstract expression of the economy. Not the other way around. Those who argue that the way to fix this crisis is to manipulate the money supply are putting effects in front of causes. At some point, though, one of the banks may break ranks. The worry is that if this happens, a wall of money will hit an economy that has no need for it all at once. Hence, very real fears of an inflationary shock. I don't think these fears are unfounded Edited February 26, 2009 by Steve Cook Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 26, 2009 Author Share Posted February 26, 2009 depends on how you are positioned right now though doesn't it.for some of us what has happened & what is about to unfold is in slooooooooooooooooooooow motion. Not really a panic then is it. Besides, even if it was going to happen slowly, you'd still want to be the first. Quote Link to comment Share on other sites More sharing options...
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