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EScroogeJr (< 20)

We can't print our way out of trouble? Yes, we can.

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April 11, 2008 – Comments (4)

Three weeks ago, I had this to say about Bernanke's printing press:

"M2 growth in Feb was 6.9% vs. Feb 2007. But this is not all. Six months from Aug to Feb produced an annualized growth rate of 7.7%. But wait, it gets even better. During the last 3 months from Nov to Feb M2 grew at annualized 10.3%. The last number, IMHO, is closest to the actual inflation to be expected in 2008.

http://www.federalreserve.gov/releases/h6/Current/ 

And this graph is just fascinating.

http://www.nowandfutures.com/key_stats.html

 

Well, the Fed has published its March data, and I have to say here, this data does not point to deflation. My updated writeup that incorporates the new data will look like this:

"M2 growth in March was 7.0% vs. Mar 2007. But this is not all. Six months from Sep to Mar produced an annualized growth rate of 8.6%. But wait, it gets even better. During the last 3 months from Dec to Mar, M2 grew at annualized 12.5%. The last number, IMHO, is closest to the actual inflation to be expected in 2008.

http://www.federalreserve.gov/releases/h6/Current/ 

And this graph is looking as fascinating as ever.

http://www.nowandfutures.com/key_stats.html "

 

4 Comments – Post Your Own

#1) On April 11, 2008 at 10:44 PM, lquadland10 (< 20) wrote:

G-7 Says Outlook `Weakened,' Warns on Currency Swings (Update3)

By Simon Kennedy

April 11 (Bloomberg) -- Finance chiefs from the Group of Seven nations said the global economic slowdown may worsen amid an ``entrenched'' credit squeeze and signaled concern over the dollar's slide.

``Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability,'' the G-7's finance ministers and central bankers said in a statement after talks in Washington today.

The officials downgraded their outlook for the world economy from that of two months ago, blaming the U.S. housing recession, credit-market turmoil, commodity prices and inflation pressures. The dollar has lost 8 percent against the euro and 6 percent versus the yen since the G-7 last met in Tokyo in February.

``They're trying to discreetly throw a lifeline to the dollar,'' said Sophia Drossos, a currency strategist at Morgan Stanley in New York, who used to help manage the Federal Reserve's foreign-exchange holdings. ``Had they not said anything, the dollar would have resumed its sell-off. This acknowledges there has been increased volatility.''

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#2) On April 11, 2008 at 11:05 PM, EScroogeJr (< 20) wrote:

I can't see why anybody would want to hold green paper that pays 2.25% a year while its supply increases 20% a year and its underlying economy is not producing much goods except house prices and homeowner imputations. I guess, the reasons must be political, because economic common sense can't explain it.

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#3) On April 12, 2008 at 12:38 AM, mandrake66 (96.39) wrote:

I see the "printing" part. I don't see the "out of trouble" part. Into, maybe, but not out of.

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#4) On April 14, 2008 at 5:46 PM, ATWDLimited (< 20) wrote:

All too True, all too true. Come read The "Official" Dollar Report to see what happens tot he dollar, the economy and inflation.

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