patrick.net

Housing always goes up. Thanks for asking.

http://research.stlouisfed.org/fred2/series/CMDEBT

The fed is definitely following a weak dollar policy. That's not the same as domestic inflation though. People tend to get confused about this.

Even if it does nothing else, lower interest rates today makes stocks more valuable today in the same way it makes bonds more valuable today: their dividend is more valuable. And of course it's great for companies that are highly leveraged like financials. But that's a pretty minor factor over the long haul for stocks, and swings the other way too.

There seems to be this meme going around that the fed is causing commodity prices to go up dramatically. It's nonsense.

Of course a weaker dollar means higher oil prices, but that's about it, and it's a minor factor when you look at the correlation of commodities prices and the dollar index. The commodities bull has been happening for 10 years, and was well underway long before most Americans had even heard the term "Quantitative Easing".

A loose monetary policy does not suspend the laws of supply and demand for commodities. Same supply. Same demand (out of people wages) = Same price. Speculators can artificially drive it up for a short while, but not for long because unlike other investment classes they have to sell their contracts or take delivery.

MarkInSF says

A loose monetary policy does not suspend the laws of supply and demand for commodities. Same supply. Same demand (out of people wages) = Same price. Speculators can artificially drive it up for a short while, but not for long because they have to sell their contracts or take delivery.

When the supply of money increases for pretty much any reason (such as in a credit bubble which blew a housing bubble or when the FED creates money to try to reinflate the credit bubble and backstop the losses of the bad loans which was inflationary to begin with) you will see commodities increase in nominal cost. However if you use precious metals as the yardstick rather than trying to use the dollar as the yardstick you will see that for thousands of years gold has been the standard. You can pretty much buy today with gold the same things you could buy with the same amount of gold a thousand years ago. An ounce of gold buys you a nice suit or a nice toga in Roman times. Any ways, the point is: paper money loses value. Gold, on the other hand holds it. You won't get rich holding gold, but you probably won't regret having some either.

Then again timing is everything. Wish I'd have bought Net Flix shares a few years ago. If you want to MAKE money you have to ride every bubble and know when to get off. Or better yet, become a landlord and make others work for you. This is the system the FED created, a world where hard work is rewarded with decreasing returns and landlords are rewarded with increasing returns. You know... the whole rich get richer scenario.

MarkInSF says

There seems to be this meme going around that the fed is causing commodity prices to go up dramatically. It’s nonsense.

If the dollar gets weaker then our farmers will export more of our food stuff for the same amount of income, reducing domestic supply.

Since oil is sold in dollars a weaker dollar will improve Chindia's oil buying power too.

Chinese-made goods might also increase in price, from what I understand when the yen strengthened 50% in the late 70s Honda etc. passed on that price increase to US consumers, who had no where else to go to get the popular fuel-efficient imports.

AdHominem says

An ounce of gold buys you a nice suit or a nice toga in Roman times.

You should have waited for the after Christmas Toga sale...

tatupu70 says

AdHominem says

An ounce of gold buys you a nice suit or a nice toga in Roman times.

You should have waited for the after Christmas Toga sale…

I wanted to but they had not invented Christmas yet in 50 B.C. and I needed a toga quickly - I was scaring the horses.