Quello che appare all'orizzonte sono nuvole nere, ma abbiamo chi con il
cuore in mano ci dice che siamo fuori dalla bufera. A chi credere? A
quello che avvisa del peridolo o a quello che alla vista di una goccia
nel bicchiere lo vede pieno?

""Rahm Emanuel was only giving voice to widespread political wisdom
when he said that a crisis should never be "wasted." Crises enable
vastly accelerated political agendas and initiatives scarcely
conceivable under calmer circumstances. So it goes now.

Here we stand more than a year into a grave economic crisis with a
projected budget deficit of 13% of GDP. That's more than twice the size
of the next largest deficit since World War II. And this projected
deficit is the culmination of a year when the federal government, at
taxpayers' expense, acquired enormous stakes in the banking, auto,
mortgage, health-care and insurance industries.

With the crisis, the ill-conceived government reactions, and the
ensuing economic downturn, the unfunded liabilities of federal programs
-- such as Social Security, civil-service and military pensions, the
Pension Benefit Guarantee Corporation, Medicare and Medicaid -- are
over the $100 trillion mark. With U.S. GDP and federal tax receipts at
about $14 trillion and $2.4 trillion respectively, such a debt all but
guarantees higher interest rates, massive tax increases, and partial
default on government promises.

But as bad as the fiscal picture is, panic-driven monetary policies
portend to have even more dire consequences. We can expect rapidly
rising prices and much, much higher interest rates over the next four
or five years, and a concomitant deleterious impact on output and
employment not unlike the late 1970s.

About eight months ago, starting in early September 2008, the Bernanke
Fed did an abrupt about-face and radically increased the monetary base
-- which is comprised of currency in circulation, member bank reserves
held at the Fed, and vault cash -- by a little less than $1 trillion.
The Fed controls the monetary base 100% and does so by purchasing and
selling assets in the open market. By such a radical move, the Fed
signaled a 180-degree shift in its focus from an anti-inflation
position to an anti-deflation position.
[Our Exploding Money Supply]

The percentage increase in the monetary base is the largest increase in
the past 50 years by a factor of 10 (see chart nearby). It is so far
outside the realm of our prior experiential base that historical
comparisons are rendered difficult if not meaningless. The currency-in-
circulation component of the monetary base -- which prior to the
expansion had comprised 95% of the monetary base -- has risen by a
little less than 10%, while bank reserves have increased almost 20-
fold. Now the currency-in-circulation component of the monetary base is
a smidgen less than 50% of the monetary base. Yikes!

Bank reserves are crucially important because they are the foundation
upon which banks are able to expand their liabilities and thereby
increase the quantity of money.

Banks are required to hold a certain fraction of their liabilities --
demand deposits and other checkable deposits -- in reserves held at the
Fed or in vault cash. Prior to the huge increase in bank reserves,
banks had been constrained from expanding loans by their reserve
positions. They weren't able to inject liquidity into the economy,
which had been so desperately needed in response to the liquidity
crisis that began in 2007 and continued into 2008. But since last
September, all of that has changed. Banks now have huge amounts of
excess reserves, enabling them to make lots of net new loans.

The way a bank or the banking system makes new loans is conceptually
pretty simple. Banks find an entity that they believe to be credit-
worthy that also wants a loan, and in exchange for the new company's
IOU (i.e., loan) the bank opens up a checking account for the customer.
For the bank's sake, the hope is that the interest paid by the borrower
more than makes up for the cost and risk of the loan. The recently
ballyhooed "stress tests" on banks are nothing more than checking how
well a bank can weather differing levels of default risk.

What's important for the overall economy, however, is how fast these
loans are made and how rapidly the quantity of money increases. For our
purposes, money is the sum total of all currency in circulation, bank
demand deposits, other checkable deposits, and travelers checks
(economists call this M1). When reserve constraints on banks are
removed, it does take the banks time to make new loans. But given
sufficient time, they will make enough new loans until they are once
again reserve constrained. The expansion of money, given an increase in
the monetary base, is inevitable, and will ultimately result in higher
inflation and interest rates. In shorter time frames, the expansion of
money can also result in higher stock prices, a weaker currency, and
increases in commodity prices such as oil and gold.

At present, banks are doing just what we would expect them to do. They
are making new loans and increasing overall bank liabilities (i.e.,
money). The 12-month growth rate of M1 is now in the 15% range, and
close to its highest level in the past half century.

With an increased trust in the overall banking system, the panic demand
for money has begun to and should continue to recede. The dramatic drop
in output and employment in the U.S. economy will also reduce the
demand for money. Reduced demand for money combined with rapid growth
in money is a surefire recipe for inflation and higher interest rates.
The higher interest rates themselves will also further reduce the
demand for money, thereby exacerbating inflationary pressures. It's a
catch-22.

It's difficult to estimate the magnitude of the inflationary and
interest-rate consequences of the Fed's actions because, frankly, we
haven't ever seen anything like this in the U.S. To date what's
happened is potentially far more inflationary than were the monetary
policies of the 1970s, when the prime interest rate peaked at 21.5% and
inflation peaked in the low double digits. Gold prices went from $35
per ounce to $850 per ounce, and the dollar collapsed on the foreign
exchanges. It wasn't a pretty picture.

Now the Fed can, and I believe should, do what it must to mitigate the
inevitable consequences of its unwarranted increase in the monetary
base. It should contract the monetary base back to where it otherwise
would have been, plus a slight increase geared toward economic
expansion. Absent this major contraction in the monetary base, the Fed
should increase reserve requirements on member banks to absorb the
excess reserves. Given that banks are now paid interest on their
reserves and short-term rates are very low, raising reserve
requirements should not exact too much of a penalty on the banking
system, and the long-term gains of the lessened inflation would many
times over warrant whatever short-term costs there might be.

Alas, I doubt very much that the Fed will do what is necessary to guard
against future inflation and higher interest rates. If the Fed were to
reduce the monetary base by $1 trillion, it would need to sell a net $1
trillion in bonds. This would put the Fed in direct competition with
Treasury's planned issuance of about $2 trillion worth of bonds over
the coming 12 months. Failed auctions would become the norm and bond
prices would tumble, reflecting a massive oversupply of government
bonds.

In addition, a rapid contraction of the monetary base as I propose
would cause a contraction in bank lending, or at best limited
expansion. This is exactly what happened in 2000 and 2001 when the Fed
contracted the monetary base the last time. The economy quickly dipped
into recession. While the short-term pain of a deepened recession is
quite sharp, the long-term consequences of double-digit inflation are
devastating. For Fed Chairman Ben Bernanke it's a Hobson's choice. For
me the issue is how to protect assets for my grandchildren.""

Ref: http://online.wsj.com/article/SB124458888993599879.html

--
http://cuccona.myminicity.com/
--------------------------
Linux Debian - kernel 2.6.18-4-amd64
_________________________
http://xnews.newsguy.com/

"Gobo" <manaia@aol.com> ha scritto nel messaggio
news:4a361eb4$0$47548$4fafbaef@reader1.news.tin.it ...
> Quello che appare all'orizzonte sono nuvole nere, ma abbiamo chi con il
> cuore in mano ci dice che siamo fuori dalla bufera. A chi credere? A
> quello che avvisa del pericolo o a quello che alla vista di una goccia
> nel bicchiere lo vede pieno?
[...]

Io preferisco il secondo....l'ottimismo è il sale della vita....diceva un
poeta naif... ;-)))

Personalmente dubito che nel medio/breve periodo possa ripartire
l'inflazione e l'aumento dei tassi...nonostante la settimana scorsa i fed
funds incorporassero un aumento di 125 bp....l'area euro 75 bp e il Regno
Unito 100 bp sul corso dei prossimi 12 mesi.
Tali previsioni sembrano decisamente fuori luogo, così come i timori d'inflazione
a cui sono legate. I segnali di un inizio della ripresa dell'attività sono
evidenti, ma è alquanto improbabile che l'assorbimento della capacità
disponibile sia tanto rapido da generare effetti inflazionistici. Al
contrario, preoccupa molto di più il fatto che le banche centrali non stiano
espandendo con sufficiente rapidità i propri bilanci. Ad esempio, il
bilancio della Fed si è ristretto dell'11% rispetto a metà dicembre (sebbene
sia aumentata la duration dato che la banca centrale ha convertito la
liquidità in attività a più lunga scadenza). La crescita annualizzata della
massa monetaria britannica è al momento quasi pari all'8,5% mentre l'accelerazione
di Eurolandia, pur attestandosi ad un robusto 16,5%, è più che dimezzata
rispetto al precedente 40% circa. Tuttavia, il successo delle misure di
allentamento quantitativo dipenderà dalla capacità della crescita della base
monetaria di sostenere l'espansione della più ampia massa monetaria. A tale
riguardo, gli ultimi segnali emersi appaiono preoccupanti. Infatti, su base
annualizzata la crescita della massa monetaria in senso ampio appare in via
di decelerazione tanto negli Stati Uniti che nell'area Euro e nel Regno
Unito, in netto contrasto con le attese di crescita dell'inflazione e di
incremento dei tassi d'interesse scontate dai mercati obbligazionari, le
quali del resto non trovano riscontro nel perdurante rialzo dei mercati
azionari.