Fed's Kohn on Crack. See's Inflation Moderating

[Aaron Copland]

Quote from canuckrookie:

Yes it does! Every time they talk about tame inflation the commodity markets give a big FU back. Talk is cheap it's all in the charts.

Thats the truth, every time the fed talks about inflation being low, commodities soar to new highs.

Hum whats the real agenda here.

 

[PohPoh]

If you believe any Fed speak then I hope you didn't believe this doozy from our Treasury Secretary Paulson on 12/01/2006:

"a strong dollar is clearly in our nation's interest, and I feel very good today about the strength of the U.S. economy."

 

[Ivanovich]

Quote from PohPoh:

If you believe any Fed speak then I hope you didn't believe this doozy from our Treasury Secretary Paulson on 12/01/2006:

"a strong dollar is clearly in our nation's interest, and I feel very good today about the strength of the U.S. economy."

Yes, he's quite believable. Especially when he speaks in that voice of his - it sounds like a homeless bum liquored up on Mad Dog 2020

 

[Landis82]

Quote from Ivanovich:

Eventually the piper has to be paid. Perhaps the discount could be lowered, or the Fed could spam dollars in auctions like the ECB is doing. They didn't cut rates, but they sure as hell threw a lot of Euros at the banking system. The Fed has other tools at it's disposal, and while I'm not saying it should have not cut rates, I am saying it should have not cut rates so deep, so fast, with no concern about anything else.

There will be a price to pay for this action, and it will be John Q. Public who pays it once again. With no savings, no purchasing power, and no discretionary income, the consumer will be dragged out the back door and beaten, left to bleed to death in the alley way.

But all the banks will be just fine!

Perhaps some banks have to fail when they make poor decisions? Maybe we need less of them. I don't know the answer, but the answer is certainly NOT stagflation!

The market has mechanisms for getting itself out of recession. But every time the Fed steps in to micro manage it, history shows them mucking it up!

You really have very little knowledge on this topic because you continue to believe that the FED has been dramatically easing, even though Fed Funds continue to trade at a full point above the yield of the 2-year treasury note.

Prior to the 3/4 point rate cut in mid-January, Fed Funds were trading nearly 2 full points above the yield of the 2-year Treasury Note.

This is CLEARLY not a dramatic easing policy. It has been anything but! Have you heard the FED conduct a "Coupon-Pass" or "Bill-Pass" lately?

Nadda.

 

[Landis82]

Quote from Aaron Copland:

The fed should have let the free market sort this out. They should stand aside and quit micro mannanging.

And let the commercial banking system and the financing of Corporate America fail?

Please tell me that you are not that dumb.

 

[Ivanovich]

Quote from Landis82:

You really have very little knowledge on this topic because you continue to believe that the FED has been dramatically easing, even though Fed Funds continue to trade at a full point above the yield of the 2-year treasury note.

Prior to the 3/4 point rate cut in mid-January, Fed Funds were trading nearly 2 full points above the yield of the 2-year Treasury Note.

This is CLEARLY not a dramatic easing policy. It has been anything but! Have you heard the FED conduct a "Coupon-Pass" or "Bill-Pass" lately?

Nadda.

Ok, replace "dramatic" with "faster than they should". The statement had a word you didn't agree with, and the rest is my view and my opinion. But it still doesn't change the fact that oil took off on the very day (moment) that the Fed surprised everyone in late August with a 50bps - which was what this argument was about in the first place. You've done a good job, almost had me redirected.

Had nothing to do with China. The run on commodities is not a China thing either. Oh sure, China is a large part of it. But the biggest aspect is inflation and speculative hedging against inflation.

 

[Landis82]

Quote from Aaron Copland:

The fed should do what they say their there to do and thats to create price stability, they get an F in my book.

You seem to naively assert that raising interest rates will bring down $14 soybeans . . .
Think again.

Do you honestly think that rates at a certain # will cut Soybean demand from overseas buyers?

Get real.

 

[Ivanovich]

Quote from Landis82:

You seem to naively assert that raising interest rates will bring down $14 soybeans . . .
Think again.

Do you honestly think that rates at a certain # will cut Soybean demand from overseas buyers?

Get real.

Though I know the question wasn't directed to me, I'll answer it: "Partly". Less as much with Soybeans, but I do believe that the Fed's indication of a desire to raise (or even maintain at this point) rates would go a long way towards speculative purchasing of commodities. the fact that the Fed has indicated it is "FULL ON" with the money spigot without any inclination to pause for tea is a large part of the problem.

 

[Landis82]

Quote from Ivanovich:

Had nothing to do with China. The run on commodities is not a China thing either. Oh sure, China is a large part of it.

So which one is it?
You contradict yourself several times over.

 

[Digs]

Only way to fix it, is SUPPORT THE $USD

By higher interest rates.

History does repeat - Volker may get the call !!

Let the market adjust.