Originally Posted by
JohnMc82
I've explained the relationship between interest rates and commodity prices a dozen times. I've provided a wealth of recent, peer-reviewed economic studies confirming this relationship.
You can call that defeat or whatever you want, but you're only proving your point that this debate is more about emotions than facts.
Okay, but my three conclusions still hold. There is no direct transmission mechanism where QE leads to commodity increases. Rather, it is rout behavioral change (i.e. hysteria) that results in portfolio change (i.e. chasing yields). You can talk about interest rates giving poor signals of excess savings leading to mal-investment, all you want – regardless, the banks are still only going to lend when they have a credible and willing borrower. And most important, the FED doesn't give a poo.
Given what is going on in the Middle East on the supply side and in China on the demand side, it is amazing that pump prices are not considerable higher. Whatever the FED could do to make gas prices higher/lower is insignificant. The FED knows that and so they don't give a poo.
Compared to FX, bond and even equity markets, the gold market is a runt that could be easily crushed within minutes by any one of a dozen central banks. The clueless hold gold as THE symbol of markets and economies (if not their very lives), and some make money off of it (IF they sell it). However, the FED doesn't give a poo.
Similarly, the gyrations of food prices, other commodities, medical care, higher education or whatever the inflationisties want to get hysterical over. Same story - small potatoes and the FED doesn't give a poo.
This is what they give a poo about -
- and will continue to give a poo about until this comes back to ‘normal’-
- put away all that other hooey and the world will start making a lot more sense.
Last edited by playwrite; 10-18-2012 at 04:45 PM.
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