by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
One of the things I love about the internet is that links last. For your soap-operatic pleasure, Sarah Palin asks a national author if he read his own newspaper, when he criticized her remarks about inflation:
So, imagine my dismay when I read an article by Sudeep Reddy in today’s Wall Street Journal criticizing the fact that I mentioned inflation in my comments about QE2 in a speech this morning before a trade-association. Here’s what I said: “everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher.”
Mr. Reddy takes aim at this. He writes: “Grocery prices haven’t risen all that significantly, in fact.” Really? That’s odd, because just last Thursday, November 4, I read an article in Mr. Reddy’s own Wall Street Journal titled “Food Sellers Grit Teeth, Raise Prices: Packagers and Supermarkets Pressured to Pass Along Rising Costs, Even as Consumers Pinch Pennies.”
It’s common knowledge that Sarah Palin is a vacuous bimbo, who gathers her economic news from the Wasilla Women’s Club Newsletter, right ?
Call me suspicious but I watched an amiable dunce win the Cold War, without firing a shot. Let’s just say I’m less inclined to question the intelligence of country bumpkin politicians, after living through Reagan, and am more inclined to second guess the propagandists at the major dailies.
Whodathunk Mama Grizzly would face the Wall Street Journal, though?
Mama Grizzly and Mama Brady know something about inflation; they do the weekly grocery shopping. When Mama Brady told me that our grocery budget had to be adjusted upwards, while I was remarking that our budgeted monthly fuel expenses had to be adjusted as well, I started thinking that inflation might just be around the corner- that’s not good for mortgage rates.
- Fact #1: The Federal Reserve’s printing press is cranking out “los dolares”, after the first-run edition didn’t work.
- Fact #2: M1 has grown some 20%,in the past two years.
- Fact #3: The Fed points to the M1 Money Multiplier, and says “remain calm; all is well“
- Fact #4: M3 is no longer published, so we turn to a figure called MZM; readily available cash. That figure is up again.
- COROLLARY #1: There is a lot of cheap money, inflating another balloon. Someone needs to let the air out of this balloon, or it will pop.
- COROLLARY #2: los dolares will be worth less in 2011 than they are now.
- COROLLARY #3: Rapid inflation is a result of a large monetary stimulus. It is usually signaled by a sharp increase in commodities.
CONCLUSION: Significantly higher mortgage rates (200-300 bp) are in the bag. If the dollar collapses, it will happen sharply (like within a few weeks of the collapse).
You don’t have to be George Soros, Gerard Celente, or Peter Schiff to see this coming. The Fed’s propaganda arm, will do its best to sell crazy to the enlightened, while the rest of the propaganda machine will assuage the public’s fear with feel-good programming.
It’s so simple, even a Mama Grizzly can figure it out…in the Wasilla Supermarket.
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UPDATE: The Huffington Post reports that Sarah was set straight:
Sudeep Reddy has responded in the WSJ to Palin’s Facebook note. He cites Labor Department data to reiterate that Palin’s argument about food prices is not grounded in fact, and he continues:
Weak demand, high unemployment and thrifty shoppers have led retailers to keep many prices from rising despite the rising cost of some commodities, including coffee and sugar. … Critics of the Fed’s quantitative easing policy are focused primarily on concerns about potential future inflation.
Palin’s mistake is that she assumed that the article, which reported that wholesale commodities prices are rising, was a measure of inflation. The WSJ ‘journalist’, corrected our little hick.
Wait a minute. Aren’t rising wholesale prices the definition of the beginning of the cost-push inflationary cycle? Damn, I’m confused.
John says:
Brian, I love seeing Palin on the delivery side of the gotcha moment with the intelligentsia.
Gold just hit above $1,400 per ounce. Fasten your seatbelt, rough road ahead.
November 8, 2010 — 9:43 pm
Tom Johnson says:
John: I prefer my precious metals in brass and copper jacketed lead.
November 8, 2010 — 11:37 pm
John says:
Tom, the reality is you very well may need those precious metals.
November 9, 2010 — 6:01 am
Jeff Brown says:
Didn’t the geniuses just lose big time to all the dunces?
November 9, 2010 — 8:33 am
Greg Swann says:
> Didn’t the geniuses just lose big time to all the dunces?
Oh, duh! Now I understand why Jerry Brown, Barbara Boxer and Patty Murray won…
November 9, 2010 — 8:37 am
Jeff Brown says:
Man, that’s just cold. 🙂 California conservative, as far as those who actually hold office, is an oxymoronic phrase. On the other hand, the across the board liberal slaughter of most competition in CA will act, IMHO, as a catalyst for a monster conservative, stem to stern conservative wipeout in 2012.
‘Course, I could be mistaken.
November 9, 2010 — 8:46 am
Greg Swann says:
> a monster conservative, stem to stern conservative wipeout in 2012.
When you wake up a free-marketer in California, you move to Nevada, Arizona or Texas. San Diego and Orange Counties offer up a pleasing illusion of freedom, but, in the long run, California is Detroit-by-the-Sea: Nothing left but starving mendicants. Sorry…
November 9, 2010 — 9:21 am
Jeff Brown says:
I meant CA will be a ‘canary in the mine’ for the country, not the state itself. Your description of CA is spot on. Not positive, but I think SD may have gone for Clinton both times. Don’t know how they went in ’08.
Most would pick Mass. as the most liberal state, which I think is mistaken. I’ll use income taxes as an example. In CA, the taxpayer hits the maximum state income tax rate BEFORE they hit median household income. Puttin’ Moonbeam in office was in character. What’s flown under the national radar though, is a proposition that passed, allowing the legislature to now pass budgets with a simply majority, instead of the 2/3 super majority with which it’s been ‘saddled’.
Even I can’t imagine what a super lib governor with a completely lib controlled legislature is gonna do with that setup.
Stay tuned.
November 9, 2010 — 9:30 am
Greg Swann says:
If you take Pecos Road in Phoenix, the northernmost extreme of the Gasden Purchase, and draw a straight line at that point from the Pacific Ocean straight across to Texas — you define a pretty interesting territory– call it Califlexas. You could have freedom without having to move, and the Zonies could have a beach to call their own at last.
November 9, 2010 — 9:55 am
Brian Brady says:
“you define a pretty interesting territory”
You might be able to extend that line east, to the Atlantic
November 9, 2010 — 10:15 am
Greg Swann says:
> You might be able to extend that line east, to the Atlantic
You’re right: If things fall apart, there’s hope in the Sunbelt.
November 9, 2010 — 10:28 am
Brian Brady says:
UPDATE: The Huffington Post reports that Sarah was set straight:
http://www.huffingtonpost.com/2010/11/09/sarah-palin-federal-reserve_n_780833.html
Palin’s mistake is that she assumed that the article, which reported that wholesale commodities prices are rising, was a measure of inflation. The WSJ ‘journalist’, set our little hick straight.
Wait a minute. Aren’t rising wholesale prices the definition of the beginning of the cost-push inflationary cycle? Damn, I’m confused.
November 9, 2010 — 10:25 am
Sean Purcell says:
Inlookers: if you don’t click on a single link (and you really should click on them all), you must click on the “remain calm; all is well” link. It really does sum up the Fed’s true position in the marketplace…
November 9, 2010 — 11:37 am
Al Lorenz says:
Even knowing this is coming doesn’t mean it is going to be fun. Brian, that is a great post with all the detail in links for those who care to see it. You also captured the lunacy of it all, as Sean points out.
November 9, 2010 — 1:05 pm