Comments on: When Fresh Money Goes Rotten http://dailyreckoning.com/when-fresh-money-goes-rotten/ Entertaining Ideas on the Economy, Markets, Gold, Oil and Investing Strategies. Fri, 10 Feb 2012 23:16:51 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Michael C. http://dailyreckoning.com/when-fresh-money-goes-rotten/#comment-7402 Michael C. Wed, 06 May 2009 18:27:15 +0000 http://dailyreckoning.com/?p=15386#comment-7402 "So why haven’t prices for necessities exploded and caused people to riot in the streets like I figure is only a matter of time, and the only people who are going to eat like kings are the ones with gold and guns?" My experience is that prices are going up and going up quickly on a few key items I've been tracking for at least 5-6 years. The lowly 13.2oz can of Alpo Chophouse Filet Minion at my neighborhood WuFart has gone from a fairly stable $0.53 in June of 2008 to an insane $0.79 last Saturday when purchased in convienent, easy to handle, 12 packs. Thats an increase of $0.26 per can, or 52%, in less than 12 months. Most of that increase has been since January with $0.11 of it in less than 30 days. Not that Alpo is all that good, although my two dogs would beg to differ, but its a real world example of pricing inflation that my pups can sink their teeth into while waiting for Ben Bernakie, Janet Yellen, or Henry Paulson to send the JBT's (Jack Booted Thugs) to knock at the door to take away their food stockpile inorder to "share" with all the other dogs who's petparents didn't prepare for the upcoming dog food collapse. My dogs promise not to drop any doggie landmines in your yard, Mogambo “So why haven’t prices for necessities exploded and caused people to riot in the streets like I figure is only a matter of time, and the only people who are going to eat like kings are the ones with gold and guns?”

My experience is that prices are going up and going up quickly on a few key items I’ve been tracking for at least 5-6 years.

The lowly 13.2oz can of Alpo Chophouse Filet Minion at my neighborhood WuFart has gone from a fairly stable $0.53 in June of 2008 to an insane $0.79 last Saturday when purchased in convienent, easy to handle, 12 packs. Thats an increase of $0.26 per can, or 52%, in less than 12 months. Most of that increase has been since January with $0.11 of it in less than 30 days.

Not that Alpo is all that good, although my two dogs would beg to differ, but its a real world example of pricing inflation that my pups can sink their teeth into while waiting for Ben Bernakie, Janet Yellen, or Henry Paulson to send the JBT’s (Jack Booted Thugs) to knock at the door to take away their food stockpile inorder to “share” with all the other dogs who’s petparents didn’t prepare for the upcoming dog food collapse.

My dogs promise not to drop any doggie landmines in your yard, Mogambo

]]> By: Junior Mogambo Ranger # 777 http://dailyreckoning.com/when-fresh-money-goes-rotten/#comment-7300 Junior Mogambo Ranger # 777 Tue, 05 May 2009 21:20:38 +0000 http://dailyreckoning.com/?p=15386#comment-7300 Why is it so many (Especially Keanesians)who are book smart are never street wise? ...according to Woodward and Hall. If banks ever start loaning out too much of their (now massive) excess reserves, and thereby start causing large price inflation, then the Fed can simply raise the interest rate it pays on reserves. Banks would then find it more profitable to lend to the Fed, as it were, rather than lending reserves out to homebuyers and other borrowers in the private sector. Voila! Problem solved.” Many Bankers are NOT lending if they can avoid it, and are putting their reserves into Treasuries as we speak. Safety over return is the name of the game now. (Return OF principle is more important than return On principle.) Furthermore, in order for The Fed to get banks to lend money to The Fed by increasing the interest rate held on reserves, the money (reserves) would be diverted from the private sector and cause less lending, less growthin the economy, less spending and end up causing-recession- which we have going on right now. Lastly, The Fed would have to prevent US Banks from lending to banks overseas (Foreign Central Banks or otherwise) or stable foreign governments in order to prevent US Banks from lending their reserves to other institutions instead of lending the reserves to The Fed. Lots of holes in this swiss cheese of an idea from Woodward and Hall. All Hail Mogambo Why is it so many (Especially Keanesians)who are book smart are never street wise?

…according to Woodward and Hall. If banks ever start loaning out too much of their (now massive) excess reserves, and thereby start causing large price inflation, then the Fed can simply raise the interest rate it pays on reserves. Banks would then find it more profitable to lend to the Fed, as it were, rather than lending reserves out to homebuyers and other borrowers in the private sector. Voila! Problem solved.”

Many Bankers are NOT lending if they can avoid it, and are putting their reserves into Treasuries as we speak. Safety over return is the name of the game now.
(Return OF principle is more important than return On principle.)

Furthermore, in order for The Fed to get banks to lend money to The Fed by increasing the interest rate held on reserves, the money (reserves) would be diverted from the private sector and cause less lending, less growthin the economy, less spending and end up causing-recession-
which we have going on right now.

Lastly, The Fed would have to prevent US Banks from lending to banks overseas (Foreign Central Banks or otherwise) or stable foreign governments in order to prevent US Banks from lending their reserves to other institutions instead of lending the reserves to The Fed.

Lots of holes in this swiss cheese of an idea from Woodward and Hall.

All Hail Mogambo

]]>