sounds like you wrote that!

Just like clockwork...

Geithner: "Economy, Iran causing oil price rise"

Quote:

The Federal Reserve throughout Mr. Obama's term has pursued the easiest monetary policy in modern times, expressly to revive the housing market. It has done so with the private support and urging of the White House and through Mr. Obama's appointees who are now a majority on the Fed's Board of Governors.

The REALLY easy money goes back to post 9-11 as I recall.

I would love to hear the REAL rationale for all this.

Bulltard was on CNBS trying deny the Fed's easing policy caused oil prices to rise previously.

From the BLS report on Real Earnings January 2012

http://www.bls.gov/news.release/pdf/real....

"Real average hourly earnings fell 1.0 percent, seasonally adjusted, from January 2011 to January 2012. A 0.6 percent increase in the average workweek, combined with the decline in real average hourly earnings, resulted in a 0.4 percent decrease in real average weekly earnings during the same period."

"Real average weekly earnings rose 0.2 percent over the month, as a result of a 0.3 percent increase in the average workweek and the decrease in real average hourly earnings. Since reaching a peak in October 2010, real average weekly earnings for production and nonsupervisory employees have fallen 1.3 percent."

Real average weekly earnings (In 1982 constant dollars) was $353.18. Keep in mind that the government has changed the CIP-U and BLS provides no data prior to 2002 due to that change. The actual real average weekly earnings are actually almost 25 percent lower. The peak in real average weekly earnings (1982 constant dollars) remains in 1973 (August or October I forget which) at just over $330. The bottom was in 1995 at just under $160.

One thing to keep in mind is that Bernanke and company are only concerned with one kind of inflation - wage inflation - and they are actively trying to prevent it at any cost.

Mish disagrees, presents charts

http://globaleconomicanalysis.blogspot.c....

Then backtracks a bit

http://globaleconomicanalysis.blogspot.c....

I didn't realize that oil is now at ATH in Pounds and Euros

The other thing none of the clowns like to talk about is that much of those new dollars simply go chasing yield in emerging markets like China and Brazil, creating economic booms over there, hence increased consumption of resources. So in a way Turbo Tim is right, but it's only a half-truth.

What Mish misses in that first post is that the "dollar index" is only the dollar compared to a bunch of other currencies that are also simultaneously devaluing, namely the Euro.

I can hear Obama now, "We were well on the road to recovery, employment was improving...then we a got flat tire...if it wasn't for the debt crisis in Europe and Iran driving up oil prices - don't blame me."

They have a scape goat to try and deflect the real issues. I think last time he blamed it on Japan's earthquake.

Same old, same old...we all get bent over the table and screwed in the rear-end. What's really new here?

Meanwhile, I'm watching all my cash sitting on the ****ing sidelines get turned into toilet paper!!! NOW WHAT!?!?!

I suspect we will find out Mish is wrong when the economy and oil price crash all together.

And the next bubble will be student debt.

I have clients that now wait until their student loan pays out before they can pay their auto insurance bill with me.

Not a good sign.

In the wake of all the Ponzi schemes there is little demand for borrowing except by TBTF financiers, statistical HFTs searching for a big fat tail, and governments.
With no demand for assets the US has deflation. With productive wages and real profits down, there is no end in sight to asset price declines.
All the talk about monetary policy is a canard. The only money the FRB creates is reserve notes. There is so little demand for borrowing US dollars the banks have deposited almost 2 trillion at the FRB.
Commodities on the other hand have a world market.

Interest rates will have to increase significantly from current levels before any pea-eating will commence.

The cost of debt is just too low right now for any realy pain to be felt.

Owebama will defy his green buddies this summer and allow all blends of gasoline to be sold across the nation. Executive order. And you'll see gas prices fall by a dollar a gallon as he also signs off on drilling projects and a new route for the Keystone pipeline. This is all part of his reelection drive. Take it to the bank.

Once Boone Pickens shows up on CNBS we will all know it's just another asset bubble generated by cheap money, a tall tale (insert any non existent weapons of mass destruction of your choice here) and a stupid media that will hype it. After the barbarians extract your money at the pump, they will short oil precisely after they sold their long positions to your pension fund. This way we all get bend over twice.

Cheers.

I don't know that many can see this monetary policy is flowing directly to the banks through the back door. Watch prices move. I don't believe this is private, outside the bank action, but direct green light money into markets out of the banks. Bernanke gives them more rope, they run more corners. Being the ECB is also doing this, we have a double green light.

The price of anything only goes up if the supply on the market is limited. When I was getting my head ripped off trying to trade oil (I came to the market with an eye dropper while others had super tankers), I saw 2000 contract positions show up and positions over 1000 were common. The entire US demand for oil is less than 20,000 per day, so maybe you get the point. These positions would be devoured in maybe 45 seconds when the market was going good. People or outfits that wanted a sizable position on the other side would take large chunks. Who buys 2 million barrels of oil? Or sells it? How often does it happen and what happens when someone that can take delivery, but maybe doesn't want to has an overwhelming long position against shorts that can't make delivery or don't want to?

Obama is blaming speculators. I believe a lot of it is the banks themselves. Not just USA banks but banks in Europe as well. Rockefeller interests run US foreign policy. Note the neocons run both the Democrat and Republican foreign policy. Iran is a trading strategy as much as a foreign policy strategy.

Note 2008. We went to around $144 then the bubble burst. We can't have it both ways that demand was driving that bubble when it turns out we were awash in oil 30 days later. No, the big banks were suddenly impaired and they had to drop their positions.

Quasi governmental organizations like banks shouldn't be allowed to directly participate in leveraged commodity markets. Goldman can acquire a few billion in XOM, then influence the oil markets, drive the price of both and take their profits out on XOM. They got the green light to trade in markets to allow them to hedge this trade, which would indicate they would be short oil. What do you think the chances are they are long XOM and short CL? Right now, I would say 99 to 1 against.

It has been my observation that oil trades up to a fibonnacci. I believe if we get much past $110 we are going back to $144. The next stop is $233. I believe a good portion of the US population quits driving with $7 gasoline. The banker don't care. As in Greece, all he wants is his pound of flesh.

Quote:

I believe a good portion of the US population quits driving with $7 gasoline.

That won't be good for Obama's so-called auto industry recovery.

Do the math:
Most jobs of these great jobs they're "creating" pays what, something like $8.25/hr or minimum wage?

Unless you're driving a Prius, at $7/gal your spending $14/day on fuel just to get back and forth from work.

This works out to be about first 2hrs of each 8hr day goes to filling up the tank.

Then the 3rd hour of every day goes to pay the Federal and State Income taxes in that tax bracket.

What's left over gets taxed around 8.5% by the local and state sales tax.

There's not a lot left over - no worries though, we're knocking on DJIA 14k soon....

the thing is - how will any economy EVER have stable prices if fractional reserve currency is used? So long as banks are allowed this, stability is impossible. And why would any wealthy person allow that to stop? Inflation/deflation are excellent ways to make massive amounts of money (if you understand the wealth cycle).

So, what alternate is there? The more people that exist, the fewer units of monetary resource is available to each individual. This makes each unit more valuable since demand outstrips supply (for fixed currency - e.g., gold). Therefore, there must be constant deflationary pressure in money supply.

Interested to hear further thoughts on that actually...

Considering you could but a gallon of gasoline in 1960 for a shiney silver quarter (in the US) and now a shiney silver quarter is worth more than a gallon of gasoline today, then the conclusion is that gasoline's value has depreciated relative to the value of a shiney silver quarter, right?



There really isn't any "inflation," only a devaluation of the value of a dollar thanks to the FED's unlimited release of Federal Reserve Notes thanks to the profligate spending habits of Government idiots (not to mention the continuous bailouts of the world's banking cabal).

Right - and that is my point to the most part. You cannot fractionally reserve silver. Therefore, price stability is closer - so long as the supply of both resources maintains a relative constant (both increasing/decreasing at similar rates). Of course, the value of that silver quarter against a barrel of oil has also cycled over that same period. Just happens to be that silver has been increasing for the past 8 years or so, so it has recovered from it's relative lows.

No, this does nothing if unbacked credit can be issued.

Obviously, they're getting drunk on the job at the WSJ again. Sops in their cups have always seem to have a way of getting honest. Be advised if you're on the Avenue of the Americas during rush hour, Manhattan dwellers. No worries. They'll forget all about it once they sober up and put their pump monkey suits back on.

Maybe we should pitch in and send daily bottles of fine wine to all the mainstream media outlets. Have the delivery guy keep the corks..

I find this interesting, as I have been reading the Credit Bubble Bulletin religiously for 11 years and reading this data.

M2 (narrow) "money" supply surged $27.8bn to a record $9.80 TN. "Narrow money" has expanded 12.6% annualized year-to-date and was up 10.1% from a year ago. For the week, Currency increased $4.1bn. Demand and Checkable Deposits slipped $0.4bn, while Savings Deposits surged $29.5bn. Small Denominated Deposits declined $2.8bn. Retail Money Funds dipped $2.3bn.

http://www.prudentbear.com/index.php/cre....

First of all Karl, I think you would like what Noland wrote. Doug is the best I have read on an ongoing basis. He was on the housing bubble when he started the CBB in 2000. Read what he wrote this week, as he goes into the 1990's, which eludes most people as to when the bubble became what it is.

As far as the little money supply clipping? I boldened currency. I have been reading this data for awhile. Banks don't get currency unless it is demanded. They can't draw interest on it and most would rather hold t-bills or something that draws interest that is liquid in lieu of cash. Worse yet, this is money that is leaving the bank and is no longer part of any reserve. They aren't keeping it for spare toilet paper and most likely it is $100's so they wouldn't use it if they were desperate. Realize that we are looking at an annual pace of close to $200 billion. That is nearly $1000 per adult in the country. When you figure the typical woman is cash flush when she over $5 in her purse and most men don't have $500 in cash assets to their name, this is a hell of a lot of money. I have noted this figure has been sizable for some time.

The point is people are hoarding cash, cash as in cash. Cash as in Benjamin Franklin cash and when you figure 80% of the population probably couldn't produce $1000 outside of their no touch savings, the top 20% are getting enough money out of the banks to make sure they have money. Bank deposits zero, Benjamin Franklins $100.

There are other reasons for more cash. ZIRP is a really good one. No interest paid, why let the ****ers have your money? Declining credit scores. People might not be able to keep a bank account funded. Organized crime? Are the bankers themselves hoarding Franklins? They would know better than anyone if the banks are solvent? This is $4 billion in a week. $1 billion is 10 million Franklins, so guess how many $4 billion is?

Then the other bold. Money market accounts. There has been a steady move out of mm accounts into the insured banking system. I can't swear to it, but I believe at one point in the past year or so, YOY on money markets was nearly a minus $1 trillion. There has been a 5 year downtrend in commercial paper, the fuel for money market accounts. The debt instrument has to exist for the account to exist and in order for the account to move into the banking system, the debt has to move there as well. Otherwise the money is stuck in the mud or extinguished with the repayment of the debt, which allows for the movement of the account into the banks.