Quote from: hugolp on June 23, 2011, 09:41:16 AM

EDIT: Also, this does not explain why the Fed and Krugman said commodity prices would not affect consumer prices and called names to the people saying the contrary, while now admiting that commodity prices have indeed affected consumer prices.

Why are you lumping Krugman and the Fed together? Krugman works for the NYT, and he regularly disagrees with the Fed's policies (he thinks the Fed hasn't been worrying enough about jobs lately). I have not been able to find Krugman saying commodity prices would not effect consumer prices. I did find him saying this: http://www.nytimes.com/2010/12/27/opinion/27krugman.html , I remember the Fed saying something like the price of iPads have not gone up

I don't really pay much attention to the Fed's PR campaign. Can't really trust things like that.

I, personally, have a lot of respect for Krugman. He warned of the dot-com bubble, housing crisis, federal deficit when the economy was doing ok, etc... His biggest argument is that government should spend during recessions, and save during normal times to smooth everything out and keep things stable. Now, I don't agree with the system we have (basing economies on debt is crazy), but as far as working with the system we have, Krugman makes a lot of sense.

Quote from: hugolp on June 23, 2011, 09:41:16 AM

You mean the rest of the currencies that central banks are also printing like crazy? Have you seen the balance sheet of the ECB? Bank of England? Any of the BRICS? Saying that commodities are going up in the rest of the currencies supporst the idea that its due to monetary causes.

Taiwan has been going through a lot of deflation. Prices have still increased.

Quote from: hugolp on June 23, 2011, 09:41:16 AM

But the best indicator is this:

Quote

Last year, from April 23rd through to August 27th, the Fed allowed its balance sheet to shrink from $1.207 trillion to $1.057 trillion for a 12% contraction as QE1 drew to a close.

Now over that interval ...

   S&P 500 sagged from 1,217 to 1,064.
   S&P 600 small caps fell from 394 to 330.
   The best performing equity sectors were telecom services, utilities, consumer staples, and health care. In other words the defensives. The worst performers were financials, tech, energy, and consumer discretionary.
   Baa spreads widened +56bps from 237bps to 296bps
   CRB futures dropped from 279 to 267.
   Oil went from $84.30 a barrel to $75.20.

Source.

The starting date chosen is "conveniently" right at a peak before a fall-off in oil prices, and the end date right before a rally. This makes me believe the source was being dishonest. But, anyways, oil is very volatile; you have to look at overall trends, and not just a couple points in time.

Quote from: hugolp on June 23, 2011, 09:41:16 AM

So now there are two options:

1. The monetary expansion of the Fed is promoting speculation and inproductive consumption, that stops when the Fed stops injecting money (more like expectations, but lets simplify a bit).

Yes, you may have a point there. But that's not the same thing as monetary inflation.

Quote from: hugolp on June 23, 2011, 09:41:16 AM

2. The price of petrol is mainly affected by supply and demand, so on April 23rd a new petrol field was opened making the price go down, just to be closed on August 27th when prices stopped going down... Or maybe people stopped using the car between those dates as well.

Oil, silver, gold, etc... are extremely noisy (volatile). They go up and down all the time. These markets are casinos for the rich. However, the overall long-term trends should, in theory, reflect real world conditions. If you look at the chart of oil prices over the last few years, you'll see that the peaks and valleys like the one presented above are very common, and not out of the ordinary at all.

Quote from: hugolp on June 23, 2011, 09:41:16 AM

Now you tell me which one you think is the correct one. The Fed propagandist are selling a story that is basically nonsense. There might be some changes in supply and demand, because there are always changes in supply and demand, but a big part of the price is due to the influence of monetary policy and the expectations it creates.

Hmm. Possibly. Maybe you and I only disagree over semantics and technicalities

Quote from: hugolp on June 23, 2011, 09:41:16 AM

The "so-called" oil shocks were in big part due to monetary policy mixed with geopolitical events that had a resonating effect due to the monetary policies of that time.

Not sure if you can chalk everything up to monetary policies; just seems like an easy way out. Economies are complex systems, and monetary policies are just one component. The oil shocks in the 70s were caused by decreased domestic production and discovery coupled with rising demand. If you're not familiar with the concept, you may want to read up on Peak Oil: http://en.wikipedia.org/wiki/Peak_oil

Quote from: Miner SiX on June 23, 2011, 10:34:54 AM

If there is no inflation there is no pay increase

WTF? Sarcasm?