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When they are as low as they are now they are artificially low.
I guess you missed the thread about how fast food prices are rising. The rest will follow.
There is no such thing as "artificial" (and there has not been in over 100 years) in an environment where rates are ALWAYS managed. Under such conditions "artificial" has NO meaning whatsoever. Rates are simply set to the level that the Fed considers appropriate for the circumstances - sometimes those rates will be higher, sometimes they will be lower, sometimes they will be in the middle, but they are ALWAYS managed - ALWAYS, thus "artificial" is a meaningless term.
Food prices go up and down with changes in the weather - that's ALWAYS been the case. That volitility is the REASON food and energy are not part of the core inflation rate.
There is no such thing as "artificial" (and there has not been in over 100 years) in an environment where rates are ALWAYS managed.
Pumping is artificially influencing the markets. Pick at my words but it all boils down to this.
Quote:
Food prices go up and down with changes in the weather - that's ALWAYS been the case. That volitility is the REASON food and energy are not part of the core inflation rate.
"Pick at my words" - in other words give you FACTS.
Once again: the idea that the stock market has gone up simply because of QE is (and always was) pure nonsense largely driven by people trying to hype the purchase of gold. The market is up so much since 2008 because:
1) it fell too far in 2008
2) US companies are in great financial shape - with good profits and record stocks of cash on hand.
Ending QE won't change either of those things.
You are right in that recent food prices increases are not merely the normal seasonal variation, but neither are they driven by any economic or monetary policy. These food price increases are essentially weather driven (by the midwest drought):
"...Chicken prices have almost doubled in the last two years, leading higher costs for restaurants and chicken lovers alike, and prices don’t seem to be dropping any time soon.
Drought conditions pushed grain prices higher in 2010. And last year's drought-- the worst since the Dust Bowl which decimated farms in the 1930s--made matters worse..."
...“It all boils down to when the drought started hitting those ranchers. The suppliers say it ain’t coming down until we get more cattle on the ground. It’s supply and demand,†Sanford said.
Filling the demand will be a years-long process, industry experts say.
“The cattle industry is truly in a free market where supply and demand rules,†said Eldon White of the Fort Worth-based Texas and Southwestern Cattle Raisers Association.
“Right now our supply is as low as it has been since the 1950s. The Jan. 1 inventory shows that the national herd and the Texas herd is shrinking further,†he said.
“That’s primarily driving the cost of beef right now,†said White, adding that as drought-ravaged range lands heal, inventory will gradually increase and eventually help ease beef prices..."
Furthermore, increases in food prices do not translate into general inflation but rather are largely confined to food. Energy prices, on the other hand, generally DO translate into general inflation because energy is required to deliver/store virtually every product. And while food prices have increased (driven by the drought) energy prices are relatively flat (and are likely to remain so). This is why there is no significant general increase in inflation
Ken
Last edited by LordBalfor; 02-19-2014 at 09:46 AM..
"Pick at my words" - in other words give you FACTS.
Once again: the idea that the stock market has gone up simply because of QE is (and always was) pure nonsense largely driven by people trying to hype the purchase of gold.
"Pick at my words" - in other words give you FACTS.
Once again: the idea that the stock market has gone up simply because of QE is (and always was) pure nonsense largely driven by people trying to hype the purchase of gold. The market is up so much since 2008 because:
1) it fell too far in 2008
2) US companies are in great financial shape - with good profits and record stocks of cash on hand.
Ending QE won't change either of those things.
You are right in that recent food prices increases are not merely the normal seasonal variation, but neither are they driven by any economic or monetary policy. These food price increases are essentially weather driven (by the midwest drought):
"...Chicken prices have almost doubled in the last two years, leading higher costs for restaurants and chicken lovers alike, and prices don’t seem to be dropping any time soon.
Drought conditions pushed grain prices higher in 2010. And last year's drought-- the worst since the Dust Bowl which decimated farms in the 1930s--made matters worse..."
...“It all boils down to when the drought started hitting those ranchers. The suppliers say it ain’t coming down until we get more cattle on the ground. It’s supply and demand,” Sanford said.
Filling the demand will be a years-long process, industry experts say.
“The cattle industry is truly in a free market where supply and demand rules,” said Eldon White of the Fort Worth-based Texas and Southwestern Cattle Raisers Association.
“Right now our supply is as low as it has been since the 1950s. The Jan. 1 inventory shows that the national herd and the Texas herd is shrinking further,” he said.
“That’s primarily driving the cost of beef right now,” said White, adding that as drought-ravaged range lands heal, inventory will gradually increase and eventually help ease beef prices..."
Furthermore, increases in food prices do not translate into general inflation but rather are largely confined to food. Energy prices, on the other hand, generally DO translate into general inflation because energy is required to deliver/store virtually every product. And while food prices have increased (driven by the drought) energy prices are relatively flat (and are likely to remain so). This is why there is no significant general increase in inflation
Ken
Food prices have been up for many years and anyone that does the grocery shopping knows it, and also knows it's been partially combatted by smaller portion sizes. I'm guessing Lady Balfour does most of the shopping or you don't notice because you don't buy groceries in the quantities and frequency like many of us do?
I agree that QE isn't the sole reason the stock market has rebounded but it seems you are hurting that position by denying that QE hasn't had a role in other aspects like food, gas and so forth.
Look at the average gas price, click on the 10 year graph.
It hasn't gone below $3 average in over 3 years now and during those 3 years has frequently bounced around the levels that once upon a time got blamed on "Bush's oil buddies" and led to congressional investigations and promises to "take those profits".
Food prices have been up for many years and anyone that does the grocery shopping knows it, and also knows it's been partially combatted by smaller portion sizes. I'm guessing Lady Balfour does most of the shopping or you don't notice because you don't buy groceries in the quantities and frequency like many of us do?
I agree that QE isn't the sole reason the stock market has rebounded but it seems you are hurting that position by denying that QE hasn't had a role in other aspects like food, gas and so forth.
Actually I do nearly ALL the food shopping.
How has QE impacted food, gas, etc?
All QE is, is an asset swap. The Fed swaps treasuries for mortgaged-backed securities. It has NOTHING do to with food, gas or any other such commodity - nor does it have much of anything to do with stocks. Aside from keeping MBS yields low (which does have a slight impact on stock prices by making such competing bonds less attractive to investors) there is little impact on the stock market. It's certainly NOT pumping billions of dollars into the stock market each month as ignorant posters on this board seem to think it is.
Ken
Last edited by LordBalfor; 02-19-2014 at 10:48 AM..
It hasn't gone below $3 average in over 3 years now and during those 3 years has frequently bounced around the levels that once upon a time got blamed on "Bush's oil buddies" and led to congressional investigations and promises to "take those profits".
As even your OWN LINK shows, gas prices have been essentially flat (ie rangebound) for the last 3 years and have still not reached the peak price of 2008. Energy price increases are not really a factor anymore - US consumption is falling and US oil/gas production is at record highs - with the US about to become the worlds largest oil exporter - all of which is likely to put a damper on any major inflation risks.
Food prices are up, but since they are largely drought driven, eventual easing of the drought will bring prices back down - and have NOTHING to do with either economic or monetary policy (certainly nothing to do with QE). All these silly claims by wingnuts/goldbugs that QE will cause massive inflation and collapse of the US dollar have proven to be completely untrue - with almost no general inflation and the dollar remaining fairly strong.
As even your OWN LINK shows, gas prices have been essentially flat (ie rangebound) for the last 3 years and have still not reached the peak price of 2008. Energy price increases are not really a factor anymore - US consumption is falling and US oil/gas production is at record highs - with the US about to become the worlds largest oil exporter - all of which is likely to put a damper on any major inflation risks.
Food prices are up, but since they are largely drought driven, eventual easing of the drought will bring prices back down - and have NOTHING to do with either economic or monetary policy (certainly nothing to do with QE). All these silly claims by wingnuts/goldbugs that QE will cause massive inflation and collapse of the US dollar have proven to be completely untrue - with almost no general inflation and the dollar remaining fairly strong.
Ken
Pointing to one artificially high starting point is as illegitimate as choosing the lowest point after the collapse and "trending" from there.
As for gas prices, let's review economics 101. Less Demand + More Supply = level prices ?
The ag issue gets vastly messier given the diversity of products and their availability as substitues for one another. You do have a correct point that the lower yields in some years depleted stocks and increased prices....and that will take another good year like 2013 to fully reverse.
Pointing to one artificially high starting point is as illegitimate as choosing the lowest point after the collapse and "trending" from there.
As for gas prices, let's review economics 101. Less Demand + More Supply = level prices ?
The ag issue gets vastly messier given the diversity of products and their availability as substitues for one another. You do have a correct point that the lower yields in some years depleted stocks and increased prices....and that will take another good year like 2013 to fully reverse.
Even aside from the "high point", gas prices are essentially flat over the last 3 years - the first time we have not seen a major increase over such a period of time in a longggggg time.
Your "Less Demand + More Supply" equation ignores the fact that gas is a GLOBAL commodity and while US demand is down, world demand is not. Essentially the increase in US production and decrease in US consumption has offset the increase in global demand pricewise, resulting in flat prices here in the US.
Ken
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