Sunday, September 30, 2012

Tim Duy — If QE Causes Commodity Price Inflation...


Inflation? What inflation exactly?

Tim Duy's Fed Watch
If QE Causes Commodity Price Inflation...
by Tim Duy

Take that, Zero Hedge.

3 comments:

Dan Lynch said...

Hmmmm..... I don't follow commodity markets closely, but Randy Wray does:

"I was able to conclude beyond any doubt that it was a speculative bubble driven by a “buy and hold” strategy adopted by managers of pension funds."

http://www.economonitor.com/lrwray/2011/09/22/the-biggest-bubble-of-all-time-commodities-market-speculation/

and a follow up piece (Randy actually wrote 3 or 4 articles on the subject)

http://www.economonitor.com/lrwray/2011/09/27/is-the-commodities-bubble-a-case-of-index-speculation-by-money-managers/

Randy does *not* claim that QE is a factor, but inquiring minds have to wonder if ZIRP cannot help but push pension funds out of bonds and into riskier investments ?


paul said...

"Randy does *not* claim that QE is a factor, but inquiring minds have to wonder if ZIRP cannot help but push pension funds out of bonds and into riskier investments ?"

…and lets not forget that in every case this kind of activity can only shift existing nominal wealth around within the economy, it cannot increase it. It can only affect the distribution, not the quantity.

Dave said...

When I first started investing I went straight into the futures market.

The idea that someone who is invested in bonds who obviously wants a zero risk asset would think, "OK I've sold my bond position, what would be a similarly conservative position to keep my portfolio balanced? I know! How about soybeans!" is absolutely insane.

Who in their right mind would think that way? It is no secret how ridiculous the commodity markets are.

What am I missing?