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ollie plimsolls

Is M3 Money Warning Of An Inflationary Blow-off In The Us?

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Worth a read for those interested in where increases in m3 might be taking us, this section seems quite pertinent.

Japan lived through this in the 1980s when it allowed property and stocks to mushroom out of control, mistakenly thinking the effects would be benign because retail price inflation was low. (The US did much the same in the 1920s but the collective mind in Washington and New York seems to forgotten that).

Capital Economics makes a different argument. Mr Ashworth said his group at first supported the Fed’s decision, agreeing that (narrower) M2 was good enough on its own.

“Recent evidence has made us reconsider that position. It appears that broad money and consumer prices have begun to move in tandem once again. Over the past two years M3 growth may even have been leading core inflation by a few months,” he said.

Implication: inflation is about to jump up again.

Telegraph

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Guest grumpy-old-man
Worth a read for those interested in where increases in m3 might be taking us, this section seems quite pertinent.

Telegraph

references to the 1920's keep making ever more regular appearances I notice. :ph34r:

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references to the 1920's keep making ever more regular appearances I notice. :ph34r:

Very similar situation to 20's, suspect similar (but different ) outcome, right now I suspect most people cant remember what a real reccession feels like and a good few have never experienced one, never mind a depression. Should be fun, shares and maybe property dropping 40%+, will be able to have a real shopping spree, maybe even be able to get that long wanted yacht for a song.

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Very similar situation to 20's, suspect similar (but different ) outcome, right now I suspect most people cant remember what a real reccession feels like and a good few have never experienced one, never mind a depression. Should be fun, shares and maybe property dropping 40%+, will be able to have a real shopping spree, maybe even be able to get that long wanted yacht for a song.

More like 90%, or with the potential of the monolithic deflation coming our way perhaps much less.

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It seems to be central bankers' intent to have as much damaging inflation beforehand to make a really thorough job of destroying the economy.

We are getting ever closer to a 1920's style bust as the imbalances and debt grow.

As for US M3, what about UK M4?? !!!!!!!!

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More like 90%, or with the potential of the monolithic deflation coming our way perhaps much less.

:o:o:o 90%

Are you sure? do you really belive that asset prices could fall by 90%.

Ok I am on the bear side of the fence - but this just seems ridiculous.

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:o:o:o 90%

Are you sure? do you really belive that asset prices could fall by 90%.

Ok I am on the bear side of the fence - but this just seems ridiculous.

90 % in real terms seems pretty accurate if we get a 1929 like crash with 15% unemployment or more.

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http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

After an amazing five-year run that saw the Dow Jones Industrial Average (DJIA) increase in value fivefold, prices peaked at

381.17 on September 3, 1929.

...

An interim bottom occurred on November 12, with the Dow closing at 198.6 that day. The market recovered for several months from that point, with the Dow reaching a secondary peak at 294.0 in April 1930. The market embarked on a steady slide in April 1931 that did not end until 1932 when the Dow closed at 41.22 on July 8, concluding a shattering 89% decline from the peak.

This was of course on a gold standard. Today, high inflation would hide much of the losses nominally.

Since 2000, the DJIA measured in gold has crashed by more than 50%!

dow_gold_usd.gif

post-7800-1184671737_thumb.jpg

Edited by Goldfinger

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