tag:blogger.com,1999:blog-6616959642391988608.post5465487133670052546..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Money and inflation updateScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger22125tag:blogger.com,1999:blog-6616959642391988608.post-76846032729990727292021-09-20T16:19:37.567-07:002021-09-20T16:19:37.567-07:00^For the CPI question:
Shelter makes up nearly a t...^For the CPI question:<br />Shelter makes up nearly a third of the basket for CPI inflation, and 40 percent of the basket for core CPI that excludes the volatile food and energy components.<br />What is more interesting though is the way BLS calculates and integrates this input (using OER) and there has been a divergence between OER and housing prices. Consensus seems to imply that OER will catchCarlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-84665054765730693062021-09-20T13:54:41.230-07:002021-09-20T13:54:41.230-07:00Re: Fed's share of outstanding Treasuries and ...Re: Fed's share of outstanding Treasuries and MBS: I'll be posting some chart on this soon. But here's the bottom line:<br /><br />As of early 2003, the Fed owned about 20% of outstanding Treasuries and no MBS<br />As of the latest data, the Fed owned about 25% of outstanding Treasures and about 20% of MBS<br /><br />The charts only weakly support the notion that Fed purchases have Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-5471884972549129682021-09-20T13:19:55.878-07:002021-09-20T13:19:55.878-07:00Thomas, it's possible I misstated the %, and i...Thomas, it's possible I misstated the %, and it could be 30%. I haven't checked in awhile. Regardless, OER is a significant part of the CPI, so my main point still stands.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-65568953058870489792021-09-20T03:13:54.734-07:002021-09-20T03:13:54.734-07:00Dear Scott,
I tried to find the weight of OER in ...Dear Scott,<br /><br />I tried to find the weight of OER in a description of CPI. You are saying it is prox. 40%. Unfortunately I was not successfull. <br /><br />A newsletter published by By John Mauldin, Sept 18, 2021, states: <br /><br />In most areas, both actual rents and an accurately measured OER would be much higher than CPI shows. Together, those are almost 30% of the index. CPI would beThomashttps://www.blogger.com/profile/07628587972604826522noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-28484785982962937632021-09-19T18:59:07.815-07:002021-09-19T18:59:07.815-07:00The following is not to pick on Mr. Grannis. To pu...The following is not to pick on Mr. Grannis. To put your work out to the 'universe' and share your outlook and then to stick around deserves respect.<br />http://scottgrannis.blogspot.com/2013/11/quantitative-easing-myths.html<br />The Fed balance sheet has been expanding drastically since the onset of the recent supply shock and The Fed has absorbed most of the issued notes and bonds Carlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-60427282133630684432021-09-18T13:01:00.971-07:002021-09-18T13:01:00.971-07:00Carl - thanks for the article. According to the a...Carl - thanks for the article. According to the article, total global bond market in 2020 was $70 trillion (in dollars). For the last 5 years about 25% of these bonds trade negative! <br />People may complain about inflation, but they are not ready give up their bonds.<br />Wealth is held by aging people more concerned with loss of principal than loss of purchasing power. <br />Scott - in the minnesota nicehttps://www.blogger.com/profile/00727666702361173951noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-40982093907705376822021-09-17T16:08:14.752-07:002021-09-17T16:08:14.752-07:00^If interested, here's a nice exposé on negati...^If interested, here's a nice exposé on negative interest rates:<br />https://www.cfainstitute.org/-/media/documents/book/rf-publication/2021/rf-bhansali-negative-interest-rates.ashx<br />Excerpt (page 14 in the pdf document):<br />"This is not a fleeting phenomenon, nor is it limited to a few exceptional <br />countries. This phenomenon has persisted for close to half a decade in many <Carlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-32189733260619507432021-09-17T13:42:51.869-07:002021-09-17T13:42:51.869-07:00When bonds have negative real interest rates that ...When bonds have negative real interest rates that indicates two things: 1) those who own the bonds are losing purchasing power to those who issued the bonds, and 2) the demand for the relative safety of bonds is intense (because their price has been pushed up so high). The net result is that the risk averse among us are slowly but surely losing money while the risk-prone are earning money. It'Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-56442975435774057492021-09-16T20:15:41.189-07:002021-09-16T20:15:41.189-07:00Milton Friedman may have been right about money an...Milton Friedman may have been right about money and inflation.<br /><br />But is seems to me inflation as measured is another topic.<br /><br />Suppose people (due to C19) switch from spending in bars, restaurants, salons and public transit to buying goods? The prices in service establishments or public transit might trim down, but probably not. Many will just go out of business. But prices of Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-23783327689525476782021-09-16T18:34:35.634-07:002021-09-16T18:34:35.634-07:00With so much global debt at negative interest rate...With so much global debt at negative interest rates, I don't think we can completely rely on the bond market. It's going to take a lot of inflation to push the 10y over 2%. Heck, it'll take a lot of inflation just to get to 2%. minnesota nicehttps://www.blogger.com/profile/00727666702361173951noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-73308783010855962432021-09-16T18:17:40.289-07:002021-09-16T18:17:40.289-07:00"We love to cook and I pay attention to food ..."We love to cook and I pay attention to food prices."<br />Maybe you will like this short discussion on the hot potato effect then.<br />It's a helpful concept that is related to money velocity and can help differentiate consumer inflation and asset inflation.<br />Looking at monetary velocity, it's become clear at least so far that 'excess money' associated with Carlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-64976646512734788582021-09-16T11:38:03.884-07:002021-09-16T11:38:03.884-07:00Re my 7% guess for the CPI this year: In reviewing...Re my 7% guess for the CPI this year: In reviewing my numbers, I now guess it's going to be a little over 6%. That assumes that monthly inflation rate for the rest of the year (0.45% per month) is moderately lower than what we have seen year to date (0.54%). I still think that if I'm wrong, inflation will be higher than 6%. Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-65791574583569327602021-09-16T10:29:44.142-07:002021-09-16T10:29:44.142-07:00K.T. Cat---"Inflation is there, right in fron...K.T. Cat---"Inflation is there, right in front of us, but it's in the SP500 and real estate prices."<br /><br />I have never liked the "asset(S&P500) inflation" argument. It's asset appreciation and different from normal "inflation". It is certainly not consumer or producer inflation. It's a type of "savings".<br /><br />Real estate- the wkevinwhttps://www.blogger.com/profile/17600473578823788550noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-33814624833503937362021-09-16T04:50:05.626-07:002021-09-16T04:50:05.626-07:00I'm a rank amateur in reading these things, bu...I'm a rank amateur in reading these things, but in my life, it sure looks like inflation, when everything is considered, is way higher than what's being reported. My real estate and stock investments are <i>en fuego</i> right now. We love to cook and I pay attention to food prices. Those are a lot higher, but not like our investments. Gas is higher, too.<br /><br />What occurs to me is K T Cathttps://www.blogger.com/profile/10259428595745509790noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-74819259325883835662021-09-15T17:32:07.856-07:002021-09-15T17:32:07.856-07:00What is surprising in a way is the relative absenc...What is surprising in a way is the relative absence of incredible inflation after such an unprecedented, coordinated (and wildly excessive) monetary/fiscal "stimulus" package. The consumer and corporate income support (stimulating a simultaneous deeply negative trade balance so the effect has been global) rapidly became a debt-fueled excess cash on the private side and people are Carlhttps://www.blogger.com/profile/01792779708580094262noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-35382726420375132782021-09-15T11:40:45.995-07:002021-09-15T11:40:45.995-07:00I'm open-minded to your inflation thesis, but ...I'm open-minded to your inflation thesis, but skeptical.<br /><br />The bond market is saying there's nothing to see here. Ditto gold.<br /><br />Breakevens on fives and tens are super stable.<br /><br />I keep coming back to MV=PY.<br /><br />Very little in the past 13 years has changed the basic construct: Materially higher M, materially lower V. This results in low-but-positive P andGrechsterhttps://www.blogger.com/profile/08898953158865778397noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-57149788760781831082021-09-15T07:45:37.586-07:002021-09-15T07:45:37.586-07:00Chris, re "what is your estimate of 2021 CPI ...Chris, re "what is your estimate of 2021 CPI inflation?" I'm going to guess 7%, and I'll add that if I'm wrong it will be even higher. We'll find out if I'm right by the middle of January next year, when the December CPI is released.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-21732522330955234222021-09-15T06:49:46.874-07:002021-09-15T06:49:46.874-07:00What is your estimate of full-year 2021 CPI inflat...What is your estimate of full-year 2021 CPI inflation? And when will we learn of the govt's calculation of this? Thanks.Chrishttps://www.blogger.com/profile/08605357066384353530noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-48737495047841989032021-09-15T06:41:46.171-07:002021-09-15T06:41:46.171-07:00The money printing experiment has morphed in ways ...The money printing experiment has morphed in ways few predicted. I am wondering if we are seeing the "bad money driving out the good" being played out. This was posited to explain precious metal/currency backing, but I think now comes into play with the money printing- which creates paper asset bubbles.<br /><br />Example- money-losing enterprises, and even some that "make money&wkevinwhttps://www.blogger.com/profile/17600473578823788550noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-41248979589166162772021-09-15T04:40:39.483-07:002021-09-15T04:40:39.483-07:00IF you're right-and I have no reason to believ...IF you're right-and I have no reason to believe otherwise, then one must wonder why the ten year stubbornly stays so low in yield. I posit that supply and demand forces are overwhelming common sense inflation' forces and the days of rates reacting to inflation like they are "supposed" to are over. If that is correct then positioning for inflation is largely moot.stevehttps://www.blogger.com/profile/07387986994469835875noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-34878249713308625872021-09-15T04:04:17.250-07:002021-09-15T04:04:17.250-07:00W Polsce podobnie tylko robia to za posrednictwem ...W Polsce podobnie tylko robia to za posrednictwem Państwowych banków aby obejść prawo. Pozdrawiamgriot1234https://www.blogger.com/profile/11786711676569025115noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-81754463384313121022021-09-14T17:19:07.227-07:002021-09-14T17:19:07.227-07:00First, there is no chance that Scott Grannis can &...First, there is no chance that Scott Grannis can "make a fool of himself." <br /><br />Years (decades?) of superb blogging and insights cannot be undone by one or two missed calls, which anybody who is brave enough to forecast will make. And I am not saying any missed calls have been made. The jury is still out on inflation. <br /><br />I will now engage in rank cherry-picking.<br /><brBenjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.com