OdysseyRe Donates to Romney SuperPAC

[ERICOPOLY]

And this part of the article is particularly telling:

 

AAA reported in its latest update on Sunday that the statewide average price for a gallon of regular unleaded gasoline is $4.655. Saturday's average of $4.6140 was the highest since June 19, 2008, when it was $4.6096.

 

Gas prices in California are up an astronomical 0.9% (cumulatively) over the past 4 years since the prior peak in 2008, which was prior to all the QE programs at the Fed.

[kevin4u2]

Is anyone seeing what is going on in California. That is merely a preview of HyperInflation. The world's resources are not as elastic as the PHD Standard would have you believe. Keep printing keep subsidizing unproductive classes, in the end they will suffer the most.

 

 

The reason they are printing money is to head off deflation and keep interest rates low.  It will only cause inflation if and when those excess bank reserves enter into circulation.  Do a search on debt deflation cycle.  Ask the Japanese if they have had hyperinflation. 

 

Anyway, here is what Bernanke recently said in response to this:

 

With monetary policy being so accommodative now, though, it is not unreasonable to ask whether we are sowing the seeds of future inflation. A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size. Moreover, the way the Fed finances its securities purchases is by creating reserves in the banking system. Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years.

[eclecticvalue]

Is anyone seeing what is going on in California. That is merely a preview of HyperInflation. The world's resources are not as elastic as the PHD Standard would have you believe. Keep printing keep subsidizing unproductive classes, in the end they will suffer the most.

 

 

The reason they are printing money is to head off deflation and keep interest rates low.  It will only cause inflation if and when those excess bank reserves enter into circulation.  Do a search on debt deflation cycle.  Ask the Japanese if they have had hyperinflation. 

 

Anyway, here is what Bernanke recently said in response to this:

 

With monetary policy being so accommodative now, though, it is not unreasonable to ask whether we are sowing the seeds of future inflation. A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size. Moreover, the way the Fed finances its securities purchases is by creating reserves in the banking system. Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years.

 

Actually QE is an asset swap, Good job on posting that passage from bernanke's speech. He even says QE is not money printing if you read closely. Even though you said the fed was money printing.

[Rabbitisrich]

Do you really think gas in california hit near $6 because of a refinery outage?

 

$6?  Wow, glad I'm not living in that part of California.

 

The refinery is back online now, so soon you'll have your answer.  Will prices decline in the weeks ahead?

 

Here is some more information for you:

 

http://www.usatoday.com/story/money/business/2012/10/07/calif-gas-prices-hit-all-time-high/1617801/

 

This is a good article summarizing the supply disruptions: http://www.econbrowser.com/archives/2012/10/california_gas.html

 

There isn't much evidence that California demand has exploded. For example, estimates of vehicle miles traveled on California highways ranged from flat to slightly over 1% growth YOY.

[ERICOPOLY]

It's both printing and an asset swap.

 

First they print the money, then they swap it for an asset (bonds).

 

However they are using disappearing ink -- it gets undone both as interest is collected as wells as when the bonds reach maturity.

 

It is inflationary of course (but right now it's like spitting into a deflationary headwind).

 

They can reverse it of course by selling the bonds -- but if they realize a loss on the trade (including interest) it still amounts to a certain degree of printing.

 

 

 

[Rabbitisrich]

Is anyone seeing what is going on in California. That is merely a preview of HyperInflation. The world's resources are not as elastic as the PHD Standard would have you believe. Keep printing keep subsidizing unproductive classes, in the end they will suffer the most.

 

 

The reason they are printing money is to head off deflation and keep interest rates low.  It will only cause inflation if and when those excess bank reserves enter into circulation.  Do a search on debt deflation cycle.  Ask the Japanese if they have had hyperinflation. 

 

Anyway, here is what Bernanke recently said in response to this:

 

With monetary policy being so accommodative now, though, it is not unreasonable to ask whether we are sowing the seeds of future inflation. A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size. Moreover, the way the Fed finances its securities purchases is by creating reserves in the banking system. Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years.

 

Actually QE is an asset swap, Good job on posting that passage from bernanke's speech. He even says QE is not money printing if you read closely. Even though you said the fed was money printing.

 

Or not yet, at least. I like this FT article distinguishing between "today money" and "tomorrow money": http://ftalphaville.ft.com/2012/10/02/1187841/dont-call-it-money-printing-rubiks-cube-edition/

[eclecticvalue]

It's both printing and an asset swap.

 

First they print the money, then they swap it for an asset (bonds).

 

It is inflationary of course (but right now it's like spitting into a deflationary headwind).

 

 

The fed create a reserve on the balance sheet for those securities but it is mostly out of thin air. I know it hard to understand that and it may look like printing at first. That is what the fed is doing though. Also fed controls monetary policy they do not print money. Congress prints money with fiscal policy.

 

Also QE could help with the recovery if banks lend their reserves they have received from the fed. But banks do not want to. So we are seeing signs of deflation instead of inflation. Read this for more information on QE http://pragcap.com/understanding-quantitative-easing

[beerbaron]

So far Ray Dalio has the best explanation for QE or credit creation. He basically says:

 

"Credit can be created by anybody, when someone comes and paints your house and you say I'll pay you in 30 days, you are creating credit. The FED does the exact same thing when she buys bonds, except that there is no claimants for the liability."

 

BeerBaron

[wknecht]

Curious, it seems Charlie Munger Jr. decided to weigh in on the subject writ large...

 

http://www.businessinsider.com/jerry-brown-and-the-mungers-2012-10

 

Quote from the article: "Charlie Munger Jr.'s measure aims to ban all corporate and union donations to political candidates."

[Parsad]

Curious, it seems Charlie Munger Jr. decided to weigh in on the subject writ large...

 

http://www.businessinsider.com/jerry-brown-and-the-mungers-2012-10

 

Quote from the article: "Charlie Munger Jr.'s measure aims to ban all corporate and union donations to political candidates."

 

I agree with him on both counts.  Cheers!