Ha ! Just wait and see. I agree with your position on the feds lowering rates through 2008.
Again, in my opinion the wrong medicine.
Clueless Bernanke Blows It Again
- Thread starter AAAintheBeltway
- Start date
Ha ! Just wait and see. I agree with your position on the feds lowering rates through 2008.
Again, in my opinion the wrong medicine.
What should they rather do in your opinion though. We hear a lot from people who argue that the Fed should stand pat or even raise rates right now.
Would that get the Fed closer to reaching their goals (stable growth and low inflation) rather than cutting rates at this point? I doubt it.
I respect your opinion but I was trading in the Bond pit before some on ET were born. Two points. One, Bond futs have come off 6 points in less than a month. Secondly Bond traders were not buying the Long end of the curve because of deflation expectations.
Rather the buying that took place was the a. unwinding of long crap high yield vs. short treasuries, b. momentum traders who thought if Bernanke keeps easing the Bond was cheap to the curve and c. flight to quality.
There's very few Treasury traders who think inflation is tame. The data is now proving that we're smack dab into 70's stagflation. Unlike pre-meeting Bond's refuse to catch a bid even on stock weakness. Trichet=Volker. Bernanke is like a relic from Edward Heath's government.
It's amazing people believe that bankers' interests and the public's interests are aligned. "what the Fed should do", "the right medicine", nostalgia for Volcker, etc. Central banks and the BIS are soley interested in maximizing profits. Any concern for us is only to the extent they don't want to kill the golden goose.
In the late 70s, the Fed was about to lose control of their only product (the dollar). They raised rates to save their monopoly. It wasn't to save the public. Of course, Americans receive newly inflated dollars before the rest of the planet, so we enjoy our standard of living. Volcker can be thought of as the CEO and we are all his employees. Our interests are kind of aligned, but his true motivation is profits.
Today is different than the late 70s. Today all currencies are paper and there is no place to run.
The plan is simple:
- let all currencies die (extracting profit until all faith is wrung out)
- wait for the public to ask for a new currency
- bankers give us a global electronic currency backed by gold
- bankers rule the planet
The BIS. Don't you love that acronym? They already think of the planet as their biz.
In the late 70s, the Fed was about to lose control of their only product (the dollar). They raised rates to save their monopoly. It wasn't to save the public. Of course, Americans receive newly inflated dollars before the rest of the planet, so we enjoy our standard of living. Volcker can be thought of as the CEO and we are all his employees. Our interests are kind of aligned, but his true motivation is profits.
Today is different than the late 70s. Today all currencies are paper and there is no place to run.
The plan is simple:
- let all currencies die (extracting profit until all faith is wrung out)
- wait for the public to ask for a new currency
- bankers give us a global electronic currency backed by gold
- bankers rule the planet
The BIS. Don't you love that acronym? They already think of the planet as their biz.
Any system, regardless of the type of system, to exist, requires somebody to pay for it.
Just like when a car company gives away discounts or a retailer, somebody will have to pay for the discount, be it either shareholders i.e. future profits, the existence of the company itself, layoffs, somebody will pay, there's no way around it.
The same thing works for central bank's discounted rates. They are good to spur growth, but if left too low for too long the consequences can be very unpleasant as you can see in the present real estate market. If you have ever been out partying, you know that the more you drink the more fun you might have in the short term, but then the worse the hangover is the next day....and as in this example, the good times are shorter than the bad times that follow...
It is very difficult to believe that 10 years of Japanese ZIRP, and a 40% rebate on Chinese products, will go unnoticed.
To start fixing this problem the US and the EU need to fix Japan and China's misguided economic mechanisms for sustainable growth. Up to that date, all the Fed can do will mean nothing in the long run, except to make matters worse if anything.
If I may add, it is probably fair to attribute both the US stock market and real estate bubble of the last decade to economic policies of Japan and China preceding and during the period.
A good question is, since the source of the problem is still alive and kicking, where will we find again the next uncontrollable price appreciation i.e, future market bubble forming? I believe it is in commodities, hence my take on possible future runway inflation.
If this is correct, lowering rates and adding liquidity can only make matters worse.
Excuse my rantings, I think I should keep away from the economics forum for a while, I don't seem to be able to keep ideas to myself once they start blabbering in my head....
Good luck and have a great weekend!
A good question is, since the source of the problem is still alive and kicking, where will we find again the next uncontrollable price appreciation i.e, future market bubble forming? I believe it is in commodities, hence my take on possible future runway inflation.
If this is correct, lowering rates and adding liquidity can only make matters worse.
Excuse my rantings, I think I should keep away from the economics forum for a while, I don't seem to be able to keep ideas to myself once they start blabbering in my head....
Good luck and have a great weekend!
Pabst, though you were addressing AAA with those remarks, just wanted to let you know that I am a "liberal yahoo" and i think Robert Reich is pretty cool. But i don't favor currency debasement and inflation as the cure-all for the dreaded "R" word.
Here are some of my recent Liberal yahooism's for ya'all to contemplate. I put similar remarks in another thread, but they, so far, have not resulted in the expected backlash, so i thought i would try them out on you, our wise conservative sage.
As a Pa(b)st certified Liberal Yahoo, it seems to me, , that Fed policy is not fundamentally at fault here. Rather I think it is our penchant for going to faraway places and killing people we don't know that has created a permanent war economy and unsustainable deficits. And this, I believe, in my warped liberal soul, is the root cause of our present, shall we say, unsavory condition. We, like all modern, fun loving, democracy-building (If i hadn't of had to kill you, i just know you would have enjoyed the hell out of democracy!), profligate-spending, debtor-nations, are playing a game of chicken with our creditors to see who will flinch first. Our goal, of course, is to inflate the debt away by expanding the money supply. That is we are monetizing the debt, at least until our creditors say "Uncle." It is traditional in these circumstances for the Treasury Secretary to give continuous assurances to banqueting gaggles of Wall Street tycoons that He and the Country (i.e., We) favor a Strong Dollar. Of, course, we do! (wink, wink!)
P.S.: We might find our attempts to spread democracy greeted with more enthusiasm if we were to demonstrate its effectiveness at home by electing our president by popular vote. Just a little suggestion.
Let us hope so, he is very bright, and he was a very competent Labor Secretary! It was a hallmark of the previous administration that highly competent individuals were appointed to the cabinet and to head various Government agencies.
The contrast with the present administration, one that prizes loyalty above competence, is striking, to say the least.
He does look a little like Lenin.
It's fairly hilarious for people like Warren Buffet to bitch that his taxes aren't high enough, and then completely bypass the tax system by donating the bulk of his money to Gates and his foundation....
It's hypocrites like Buffet and Ted Turner and Pelosi..that hire legions of tax lawyers to skirt the system... and then parade on TV mocking the rich....
doesn't pass the smell test...
It's hypocrites like Buffet and Ted Turner and Pelosi..that hire legions of tax lawyers to skirt the system... and then parade on TV mocking the rich....
doesn't pass the smell test...