The M0 of Monetary Policy

1. Bad if this is inflation coming (prob not!), worse if this is a sign that the economy is strung up by this pent-up demand for large-ticket items like the latest car or new houses and new tech that won’t come.

   Either way, that’s a whole lot of hamster bedding and fountain filler.

2. TIPS are neat, aren’t they?

3. Yeah, this is pretty scary, but the whole area is kind of weird and murky. Everyone appears to agree that the short-run danger is deflation. But in the long-run, for this and other reasons, you would think that everyone would agree that the long-run danger is serious inflation.

   But in fact the market appears to think the opposite: see the vanishing 10-year TIPS spread.

   Personally, on this one I think that the market is just plain irrational. I’m not only buying TIPS, I’m also buying Euros.

4. All I know is that you always want to attach a cover sheet to your TIPS reports.

5. Yeah, Didn’t you get the memo?

6. Screw TIPS.

   I like gooooooooooooooooooooooold

7. I’m frankly startled that one nutty troll hasn’t turned up yet to tell Golob to stick to science.

8. Golob: Stick to science you fucking wanker.

9. Slog covering economics is more fun than a barrel of monkeys!!!

10. A lot of that will be pulled back as the crisis subsides. The question will be whether its in time or not. At this point the Fed would happy if we got an inflation bump as it would reduce the relative weight of debt and is a much easier beast to tame than deflation.

11. Yes, savvy investors realize that – at some point in the future – inflation is going to zoom and the dollar is going to tank. The problem is that, at the moment, we are in a deflationary period, and the dollar is still relatively quite strong against the Euro – not because the dollar itself is all that great, but more because the Euro is even weaker, and there was a tremendous “flight to safety” into the dollar last fall which is still holding albeit tenuously (until global capital goes roaring off into the “next big thing” and whipsaws the world economy yet again). Eventually this is all going to flip with a vengeance, but nobody knows when; its impossible to time. But interestingly at the moment the Euro is back near the low it reached in November.
    http://finance.yahoo.com/q/bc?s=EURUSD=X…

    The easiest and cheapest way to invest in TIPS is via Vanguard:
    http://www.google.com/finance?client=ob&…
    https://personal.vanguard.com/us/funds/s…
    but I finally put some retirement funds into these for the first time a year ago, and they’ve dropped 7% since, something that would be impossible and unthinkable in “normal” times. At some point I know that I have to put more money into them, but who knows when?

    The simplest pure play against the dollar is via this fund:
    http://www.google.com/finance?client=ob&…
    which invests mainly in Euro government bonds (but it does have a moderately high expense ratio of 1.3%). A cheap way to speculate in gold and precious metals is this Vanguard fund:
    http://www.google.com/finance?client=ob&…
    The problem with investments like these is their volatility; you HAVE to monitor the markets and assume that you’re savvy enough to time when to get in and out, without getting your head ripped off. For a change, I actually managed to get out of Merk last fall with a profit, right after the dollar started to rise, but unfortunately it was the only smart thing I did then. Happy investing, and may you live in interesting times.

12. 11
    Are there any ETFs that will do the same things?

13. @11, Unless that inflation is a global problem. The EU has comparable public debt to the US and the crisis there is as least as bad as here, if not worse. Same with Japan, while China has a nice amount of reserves they have their own inflation issues.

    So while we may enter an inflationary period, its likely to be global, and since currency values or relative the dollar won’t tank.

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