Monday, February 21, 2011

Does this not sound ominously like CDS insurance on bogus assets?

Does this not sound ominously like CDS insurance on bogus assets?


Intrade Introduces Inflation Futures Contracts

Inflation has been getting lots of attention lately.  For example, do a Google News search for terms like "rising inflation," "inflationary pressures" or "rising food prices" and you'll find almost 3,000 results each.  Interestingly, you'll get about the same number of results for the word "deflation."  

According to the most recent WSJ Economic Forecasting Survey, the consensus of more than 50 economists and analysts is that CPI inflation will be 2.1% in December 2011.  But with all of the talk lately about rising food and commodity prices, there are many guests on CNBC, Bloomberg, and FOX Business News who think the inflationary pressures will push the rate up much higher than 2.1% by the end of the year.  

With all of the incredible divergence of opinions about future inflation, it seemed natural for Intrade to introduce inflation futures contracts, and that's exactly what just happened following my suggestion to them.  Here's the link to the six new futures contracts that allow you to take a position on the U.S. inflation rate in December 2011, based on the 12-month percentage change in the CPI-U.  

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