LIQUIDITY NEWS. FREDERIC MISHKIN & DAVID RICARDO
[Latest Global Dollar Liquidity measure: +11.9% annual growth rate; latest Endogenous Liquidity Index: -47.3%]

In his discussion of the dynamics of inflation expectations, Federal Reserve Governor Frederic Mishkin discounts the current uptick in the spread between "nominal Treasuries" and TIPS as a reflection (in part) of "changes in ... the relative liquidity of TIPS and similar maturity nominal Treasuries". Hmmm ... Now let's not forget that Mr. Mishkin is referring to a market-based indicator here. He should, perhaps, show more respect for other market-based indicators. Long ago, Manuel Johnson and Robert Keleher taught us the following golden rule, partly based on the teachings of British economist David Ricardo (1772-1823): whenever a currency falls in terms of other currencies, AND in terms of gold, AND its yield curve gets steeper, AND commodity prices soar, there's no way to hide the ugly truth — there is indeed an inflation problem.