SO MUCH TALK ON INFLATION BUT W/O ANY SENSE...

"101 economics" tell us that inflation is a function of growth in money supply outstripping growth in real product and services. You keep pumping more money into hands of participants w/o increasing actual output of goods and services, what happens, price escalation.. Inflation... What all these analysts are looking at is the effect of inflation and not the cause...what a shame?

Over the last 25 years, since the last credit shock or lets say contraction of money supply around early 1980's, there has been a mega surge in supply of money across the globe. Reckless monetary policy of bank of Japan and then of us fed in early 2000 and also now and other central banks, have caused an enormous surge in money supply.... Where has all that money gone, obviously into financial assets? More money, more the thirst for higher returns and more the risk taking, reckless investing...

Growth in financial markets (incld. Real estate) over last two decades have been able to mop up this money supply quite effectively, a super sponge. Shadow banking and all other malpractices gained prevalence along with bidding up of emerging market assets to ridiculous valuations...

Now with financial markets in mess... Money is coming out and along with that more money that is being printed by central banks is also joining hands to flow to somewhere it can find a safe haven... Which one is that? Obviously hard assets, whose supply can not be created out of thin air.. We are shouting at bubble of oil, but it is what a slight portion of the money that was into the financial markets can do, jus imagine what more of it can do...not just oil but other hard assets 9commodities).. Its no doubt a bubble but what’s more important to understand is what is this commodity bubble telling us... It is telling us that the next move has to be correction of this mess which so much of money has done...sharp rise is interest rate is inevitable across the globe including India to arrest this growth in credit and money supply and contract the existing buldge... It’s not doomsday phenomenon but a sane and commonsense logic...