Boom della moneta - gz
By: GZ on Martedì 08 Maggio 2007 21:35
Dato che non è bello ragionare per partito preso, ad esempio guardare solo al lato positivo o negativo delle cose e per contrastare il tono eccessivamente ottimista presente su questo sito copio qui il report appena uscito del John Williams, l'economista privato (nel senso che lavora per corporations) che ha ricalcolato l'inflazione USA usando i criteri pre-Clinton (pre-1996) e ha scoperto che se si usasse la stessa metodologia (governativa) sarebbe un 6.5% invece del 2.4% di cui si parla sui mercati
L'altra cosa che John Williams fa è calcolare la massa monetaria in America, M3, la grandezza che un anno fa la FED ha smesso di pubblicare. Gli risulta che stia crescendo al +13% annuo.
No so se rendo: l'economia reale, intesa come PIL sta crescendo ora dolo al +1.3% nonostante la massa monetaria sia esplosa e cresca al +13% annuo.
Tanto per dire in Cina la massa monetaria cresce sul +25%, ma perlomeno il PIL cresce del +11%
Le ultime due volte che la massa monetaria è esplosa così sono state dopo l'11 settembre quando la FED doveva "ri-liquidificare" l'economia e nel 1981 poco prima del balzo dell'inflazione oltre il 10%
Morale: mah... potrebbe essere che la FEd è costretta ad essere "dura" domani nel comunicato e può essere che l'oro parta veramente in su
Knees would be knocking audibly in the credit markets, if the Fed still reported M3 growth. Annual growth (SGS Ongoing M3 series) accelerated sharply in April to 12.9%, from 11.7% in March. The last time annual M3 growth approached 13%, the Fed was liquefying the financial system in the wake of the 9-11 terrorist attacks. Before that, the year was 1981 and official annual CPI inflation was running about 10%. If 10% inflation sounds familiar, that is roughly the level of annual CPI inflation that would be reported today using the CPI methodologies of 1980. Exacerbating the financial catastrophe that slowly is unfolding for the U.S. markets, the economy is in a deepening recession and the U.S. dollar has begun suffering nascent selling pressures. In terms of monthly averages, gold already is at an all-time high, and the trade-weighted dollar is at an all-time low. Out of touch with reality, the Dow Jones Industrial Average keeps bouncing to new highs.
As evident in the accompanying graph, the increase in annual M3 growth has started to show marked acceleration. There is little evidence of net neutral Fed policy here; liquidity is being pumped in to the system. This growth reflects not only acceleration in underlying annual M2 growth, but also 20%, plus or minus, annual growth in the non-M2 components. While this activity will do little to help the economy, it will enhance the prospects for higher inflation. The April growth rate is based on three weeks-plus of data. The final estimate for April M3 will be published next weekend, when full underlying data for the month will be available.
The current M3 annual growth is within several percentage points of its all-time high (since the Fed estimates began in 1960). Once beyond that, the modern U.S. monetary system will be in uncharted waters. Growth peaks generally have been seen around recessions, with the Fed trying to stimulate the economy, or at times when the Fed was attempting to salve the financial markets.
Peak M3 growth of 16.4% was seen in June 1971, with annual CPI inflation at 4.6%. Wage and price controls and the final U.S. abandonment of any link of the dollar to gold followed in August 1971. The next M3 peak was at 12.4% in May 1978 followed by 13.0% in December 1981. Gold prices peaked in January 1980, and annual CPI inflation hit its peak of 14.8% in March 1980. CPI fell below 10% as 1981 closed out.
The Fed again began flooding the system with liquidity as the stock-market bubble burst in 2000 and 2001, but the pace of M3 growth accelerated in response to the financial-system disruptions surrounding the 9-11 terrorist attacks. M3 hit its near-term annual growth peak of 13.3% in November 2001, a level that easily could be topped in the next month or two. M3 growth above 14% would be the highest since 1973, which was followed shortly by 10-plus percent CPI inflation.
A Hobbled Fed. The Fed's Federal Open Market Committee has a meeting this week, and no change in the targeted federal funds rate is anticipated for the pending Wednesday-afternoon statement. Once again, the Fed likely will meet market expectations as much as possible, so as to be non-disruptive. The Fed faces both inflation and recession, with little ability to counter either circumstance.
Raising interest rates can help contain inflation, when inflation is being driven by strong economic demand. The current pricing problems are related to commodity supply distortions, which will be exacerbated by mounting dollar weakness and rapidly-growing broad money supply.
Lowering interest rates can help a faltering economy, during the downleg of a normal business cycle, but this is not a normal business cycle. The downturn reflects a long-term structural change that has shifted much of the U.S. manufacturing base and wealth offshore. The result has been impaired real (inflation-adjusted) income growth, growth that has not been able to keep up with inflation.
Without sustainable real income growth, there can be no sustainable real economic growth. Short-term boosts to economic activity can be had through the expansion of debt and the liquidation of savings, but both those options are short-lived and currently are pushing against their practical limits.
Never has the Fed faced such severe economic difficulties with the financial markets so heavily dependent on foreign capital for liquidity. Foreign investors are flush with dollars from the extraordinarily massive U.S. trade deficit. It is the liquidation and repatriation of those dollars and dollar-denominated assets that has the Fed scared. Once that process starts, the U.S. central bank will have little choice but to boost interest rates, at least initially, in defense of the dollar and irrespective of domestic economic conditions.
Only the threat of a systemic domestic financial collapse is likely to push the Fed to an easing stance. That, however, will be the beginning of the process that eventually will trigger a hyperinflation. Indeed, the basic elements for a dollar collapse and an eventual hyperinflationary environment in the United States remain locked in place (see the Hyperinflation Series in the December 2006 to March 2007 SGSs).
The Economy Slows. The past month generally has been one of downside economic surprises for the financial markets. First-quarter GDP growth slowed to 1.3% from 2.5%, real retail sales were flat, industrial production contracted, annual housing growth was the worst it had been since the bottom of the last recession, help-wanted advertising sank, new claims for unemployment insurance rose, employment growth was weak as unemployment rose, consumer confidence measures fell and new orders for durable goods showed a sharp annual contraction. The only "positive" numbers were a small improvement in the trade deficit and some pickup in the purchasing managers surveys, but those series appeared to have unusual reporting quality issues.
Shown below is the pattern of real, annual growth in new orders for durable goods. To adjust for the sharp monthly volatility of the series, a six-month moving average has been used. The CPI-U was used for deflation, as the GDP component deflators are of much worse quality than is the CPI. So adjusted, annual durable goods change has turned negative in a manner generally seen only in recessions, although not all of the suggested recessions are recognized formally as such.
The series has other problems, such as the cessation of reporting of semiconductor orders in 2002. Nonetheless, the annual contraction in the series is consistent with the deepening recession indicated in other economic measures, such as retail sales and housing.
PLEASE NOTE: A "General background note" provides a broad background paragraph on certain series or concepts. Where the language used in past and subsequent newsletters usually has been or will be identical, month-after-month, any text changes in these sections will be highlighted in bold italics upon first usage. This is designed so that regular readers may avoid re-reading material they have seen before, but where they will have the material available for reference, if so desired.
General background note: The U.S. economy is in a protracted and deepening structural recession that will prove to be the second leg of a double-dip recession, which began in 2000/2001. The current downleg was signaled in mid-2005 by a series of leading indicators used for that purpose by SGS. With neither traditional fiscal nor monetary stimulus available to help turn economic activity, the current circumstance is likely to evolve into a hyperinflationary depression (see December 2006 SGS).
Inflation Surges. On the inflation front, price increases, as measured in the GDP, surged at an annualized 4.0% in the first quarter, up from a 1.7% inflation rate in the fourth quarter. Annual PPI inflation for April jumped to 3.2% from 2.5%, while annual April CPI inflation rose to 2.8% from 2.4%.
Gasoline prices have been rising due to short-term supply disruptions, and oil prices have been holding above $60 per barrel. With hurricane season less than a month away, and the with the Middle East remaining the proverbial powder keg amidst other global political tensions, risks to oil prices -- and correspondingly to inflation -- remain sharply on the upside. Also adding to upside inflation pressures are intensifying selling of the U.S. dollar and accelerating broad money growth.
The Current Environment Is Not Conducive to Stable Financial Markets. As the inflationary recession increasingly has gained market recognition, selling of the U.S. dollar and buying of gold have picked some momentum. The credit and equity markets appear to have been relatively immune to the unfolding crisis, so far.
An inflationary recession, compounded by dollar dumping, is about as bad a nightmare as the stock and credit markets can face. The big question is in the uncertain timing of the big break in the dollar. These circumstances, however, can evolve very quickly, with little or no warning. The outlook for gold in this environment remains bright.