Comments on Fund My Mutual Fund: US Government's Humanitarian Relief Agency Cutting...

$$All these things have been happening for a long ...

2008-03-27T14:15:00.000-04:00

$$All these things have been happening for a long time. Then suddenly out of the blue when did inflation ramp up? When M3 exploded. Coincidence? I don't believe so.$$

M3 was growing at 10-14% between 1998-2002: http://www.nowandfutures.com/images/m3b_long_term.png

According to your theory, commodities should have gone parabolic. Yet Oil was at $20 in 2002, copper 50 cents, etc...

Grains went ballistic after the corn ethanol subsidies came in and we doubled the number of ethanol plants (late 2006).

Oil price went out of control when OPEC ran out of spare capacity (~2004). The real question is why was it so cheap to begin with... $20 a barrel is 4 cents per cup. Bottled spring water sells for what, $1/cup?

Sorry, never heard of RBN.

2008-03-27T11:02:00.000-04:00

Sorry, never heard of RBN.

shax, we will agree to disagreeBut let me say, I d...

2008-03-27T11:01:00.000-04:00

shax, we will agree to disagree

But let me say, I do not think if Fed increased rates to 6% inflation would go away. Thats not my point. You actually made my point quite well

We've had 70M new people every year for a decade
We've had grain stockpiles falling for a decade
The dollar has been falling for much of the past decade

All these things have been happening for a long time. Then suddenly out of the blue when did inflation ramp up? When M3 exploded. Coincidence? I don't believe so. Oil didn't explode higher in 2003. Despite all the same factors - we can't blame China or India blah blah - those companies had high growth rates in 2004 just as they did in 2006. So it is easy to simply say "all this is because of China". It's not.

So I agree there are structural imbalances - in fact I write about them daily and invest based on them. And unlike the past when the Fed raising rates worked much better because the globe was much more US centric. I've written about that since last summer - the Fed is in a rock and a hard place situation. But they are THROWING gasoline onto the fire. Making the problem even more exaggerated. I don't know how any reasonable person can look at M3, and say there is no connection with the large increases in inflation we have seen in the past 2-3 years. It is not all the dollar. It is not all Chindia. It is not all anything. IT is all these things. But to bail out NYC we are inflating at a mad pace. We are now approaching a pace where for every 5 dollars in circulation we are creating 1 new one... every year. That is madness.

Do you follow RBN? Seems like a company you would...

2008-03-27T09:57:00.000-04:00

Do you follow RBN? Seems like a company you would follow. It's been on my radar for the past 6 months and have not owned it yet. Stock is down -20% this morning and all the poor company did was beat earnings and revenue estimates. Guidance was raised but maybe not as much as "they" were expecting.

ANy thoughts?

$$I dont recall having these problems in 2003/2004...

2008-03-26T20:49:00.000-04:00

$$I dont recall having these problems in 2003/2004 - and I believe 70M new people were born every year in those years as well. Correct?$$

Grain stockpiles have been falling for 10 years. Acres of top soil farmland have been declining for decades. It's not a new problem. It was just under the radar of the general public.

The Fed can do nothing about it. It's a popular myth on Wall Street that Volcker made the commodity prices go down in 1980's by adopting 20% interest rates. Absolute nonsense. Commodity prices went down in the 80's because a flood of new oil supply was ready to come from OPEC, a flood of copper out of Chile, and agricultural nutrients were in abundance.

Today we have a flood of crap mortgage debt and crap government debt, but that's all. Shortages of resources are here to stay, regardless of what the Fed does.

check out M3 herehttp://www.shadowstats.com/altern...

2008-03-26T18:57:00.000-04:00

check out M3 here

http://www.shadowstats.com/alternate_data

I have an entry in the far right margin about M3, and how it conveniently disappeared about 2-3 years ago. Look at its action since...

Funny how our food inflation really started when we pushed into ethanol and M3 took off like a rocket. I dont recall having these problems in 2003/2004 - and I believe 70M new people were born every year in those years as well. Correct?

It's all connected.

More paper money chasing fixed amount of assets is...

2008-03-26T18:54:00.000-04:00

More paper money chasing fixed amount of assets is on 1 agency.

rampant speculation with said paper money, with easy credit, is on 1 agency.

The underlying supply/demand issue is a problem in and of itself. We are helping to exaggerate it with ethanol boondoggle (legislature) and easy money flooded into the systems (central banks)

Its not the only cause, nor do I imply that. But inflation is caused by what? more money supply. Generated by whom? Those with the printing presses.

$$More... more... more. Print. Print. Print.$$You ...

2008-03-26T18:42:00.000-04:00

$$More... more... more. Print. Print. Print.$$

You make it sound like the Fed is somehow responsible for food shortages. The Fed can do nothing about it.

We have too many stomachs in the world, thats the real problem.

Every year population increases by 70 million people, thats like having a new country the size of France ever year eating food.

There is nothing Fed can do about this, the solution is to reduce population.