The Oil Drum | DrumBeat: October 27, 2006

232 comments on DrumBeat: October 27, 2006

Comments can no longer be added to this story.

Show without comments | PDF version

mjfrazer on October 27, 2006 - 10:17am

Re: manufacturing out of style.

Indeed, what is it that America does these days? New industries, such as Google, print ads to sell services and cheap goods. Are all these services just a sham economy? Not really producing each other, but feeling like we are because we are getting paid?

According to the Sprott article above: "US money supply, as measured by the most recent reading of the now defunct M3 (may it rest in peace), is up at least 50% so far this decade, and likely even more if it were still being reported."

Since the # of USD has increased 50% since 2000, should not the Dow be up 50% since 2000?

I wish there was a TOD for economics. It is quite difficult for the layman, such as myself, to figure out what is going on.

Comments can no longer be added to this story.

Darwinian on October 27, 2006 - 11:30am

Since the # of USD has increased 50% since 2000, should not the Dow be up 50% since 2000?

NO, there is no logical reason why this should be so. The stock market, (usually measured by the S&P 500, not the Dow), is not directly connected to the money supply. Though of course there is an indirect connection. An increasing money supply usually means an increasing economy, causing the market to rise. But one does not necessarily track the other and there is no logical reason why they should.

However if inflation went up by 50% in a given time, then in order for the average shareholder to stay even, the S&P 500 would have to have increased by 50% also. Still there is also no logical reason why this should actually be the case. The market usually outpaces the inflation rate, but often they go in the opposite direction.

Ron Patterson

Comments can no longer be added to this story.

elwoodelmore on October 27, 2006 - 5:39pm

excess dollars chasing overpriced equities not a direct effect of excess money in the system ? look at the p/e ratios man

Comments can no longer be added to this story.

Darwinian on October 27, 2006 - 6:37pm

Elwoodelmore, no one said one damn thing about excess dollars chasing overpriced equities. An increase in money supply does not necessarly mean excess dollars. The money supply increases because people borrow more money. Banks lending more money is what causes an increase in money supply. You can have an increase in money supply without any inflation whatsoever, and without any overpriced overpriced equities whatsoever.

None of this has anything to do with p/e ratioes.

Please pay closer attention to what the thread is actually talking about before commenting.

Ron Patterson

Comments can no longer be added to this story.

elwoodelmore on October 27, 2006 - 8:08pm

then what is your explaination of excess p/e ratios ?

Comments can no longer be added to this story.

Darwinian on October 27, 2006 - 9:08pm

Well I could give you a short lesson on why some stocks have very low p/e ratios and some have have high p/e ratios, and why they sometimes get very high. But since this original thread had absolutely nothing to do with p/e ratios, you were the only one to bring it up, I see no need to discuss p/e ratios any further.

But if you have any question or comments about peak oil or related subjects, then let us hear them.

Ron Patterson

Comments can no longer be added to this story.

elwoodelmore on October 28, 2006 - 7:46am

ok agreed just dont say anything stupid in the future

Comments can no longer be added to this story.

elwoodelmore on October 27, 2006 - 8:11pm

how long have you been a member of the bernanke fan club ?

Comments can no longer be added to this story.

Samsara on October 27, 2006 - 1:56pm

I would visit some of these on a daily basis.

http://www.prudentbear.com/

http://www.safehaven.com/

http://www.financialsense.com/

http://www.321gold.com/archives/archives_date.php

If you visit these and just reading articles, you WILL be filled in on the things mentioned above and more.

For some REAL stats on the economy:
http://www.shadowstats.com/cgi-bin/sgs?

For example;
Read the lastest one from Jim Willie.

http://www.financialsense.com/fsu/editorials/willie/2006/1025.html

One last one, Look at the charts at this link.

http://www.prudentbear.com/bc_chart_library.html

Follow those for a while, and you have your TOD for financials.

Comments can no longer be added to this story.

turbosaab on October 27, 2006 - 5:16pm

Good links, I read 321gold on a daily basis, Jim Willie is one of the better writers, Peter Schiff is good too as well as Mish (check out his site as well)

Comments can no longer be added to this story.

dbarberic on October 27, 2006 - 2:29pm

Monetary inflation is like pouring water into a bowl that overflows somewhere. The Fed can control how much it prints, but it control where the money is going to flow to. All the extra dollars flow around searching for a home. In the late 90's it was internet stocks. Most recently it was housing. Most people are predicting the next stop is hard assets (gold and commodities).

This is why you can not say that there is a one-to-one relationship between every dollar printed and an equal gain in the S&P 500.

Comments can no longer be added to this story.

beechdriver on October 27, 2006 - 4:34pm

Not quite TOD - but this site does have some good econ data:

http://bigpicture.typepad.com/comments/

Comments can no longer be added to this story.

232 comments on DrumBeat: October 27, 2006

Comments can no longer be added to this story.

Show without comments | PDF version

“Data always beats theories. 'Look at data three times and then come to a conclusion,' versus 'coming to a conclusion and searching for some data.' The former will win every time.”

—Matthew Simmons, ASPO-USA conference, Boston, MA, October 26, 2006