#1 (question on M3). Your questions indicate you don’t know what M3 is. Would take to long to explain, go read up on it.
#2 (food prices). Your implied definition of inflation is actually correct, which is why I’m surprised you missed the point. Inflation is in fact the growth of money over and above the growth of goods and services (GDP). Now, if we know M3 is growing at GREATER than 10%, but GDP is quoted as 2-3%, then we know by definition that there is inflation.
#3 (prices up another 100% in 5 years) - see comments on #2. All that money that is being printed and is currently being held outside the US will come home (examples: China sinking $3billion into hedge funds) and will drive up prices.
#4 (housing) - housing is deteriorating because the “monthly payment consumer” is not able to make the payments on his ARM loan. Defaults are increasing drastically - read up on the 2 Bear Stearns CDO hedge funds that just went to $0 this week. They held mortgage derivatives
Ok. Are you someone who believes that the Eurodollars and large-denomination time deposits included in M3 represent money "in play"? The increase in Eurodollars has not had an inflationary effect in the U.S. Those dollars are not really doing any chasing of goods with the exception, perhaps, of real estate on both coasts.
Are you also one who believes the Fed stopped offering the M3 calculations because they want to hide the real rate of inflation? The Fed has not used money supply but rather interest rates to manage monetary policy for a long time now. The fact that M2 and M3 have increased so dramatically with modest inflation highlights this disconnect. The bond market understands this. The M3 conspiracists do not.
Inflation is in fact the growth of money over and above the growth of goods and services (GDP). Now, if we know M3 is growing at GREATER than 10%, but GDP is quoted as 2-3%, then we know by definition that there is inflation.
It's that simple, huh? Just look at M3 to determine the real rate of inflation? No need to survey the actual price increases of 95,000 items in 22,000 stores? And you're lecturing me about M3 and monetary policy? The words uniquely unqualified come to mind. Do you even understand that GDP is quoted in real numbers?
All that money that is being printed and is currently being held outside the US will come home (examples: China sinking $3billion into hedge funds) and will drive up prices.
Do tax cuts allow for capital formation that's not inflationary? Just because money is being held outside the US doesn't mean it's inflationary. Foreign investment increases economic growth which can have an anti-inflationary effect as it creates more goods.
housing is deteriorating because the “monthly payment consumer” is not able to make the payments on his ARM loan. Defaults are increasing drastically - read up on the 2 Bear Stearns CDO hedge funds that just went to $0 this week. They held mortgage derivatives
Housing is deteriorating for lots of reasons. Defaults are high but no higher than historical averages. The last few years were a statistical anomaly. The subprime market makes up only about 7% of the total mortgage market. 85% of subprime loans are currently being paid on a timely basis and less than 10% are in default. This is hardly the crisis the doomers would like us to believe. The markets are so worried about it the DOW might end the day above 14,000. Yawn. What else ya got?