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Politics : Politics for Pros- moderated
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To: DMaA who wrote (112319)5/2/2005 7:26:22 PM
From: unclewest  Read Replies (2) of 793881
 
Interest rates are a function of inflation expectation. Has nothing to do with US treasury debt.

Inflation is only part of the equation...demand is another part. If the Fed quits borrowing money, rates will come down.

I read recently (last week) that the fed always raises interest rates to prevent inflation, and that is not true. Historically the fed has accepted inflation if the other choice is severe recession.

The money supply was increased so much in the past few years to avoid a recession that construction and property values (hard assets) have gone nuts. Homes in my neighborhood have gone up 70% in the past 18 months. The appraisal on the office/warehouse building I started four months ago is up 14.3%. And my costs have remained flat. That is happening in numerous communities across the country.

Whoever is publishing the reports that we have 3% current annual inflation is nuts.
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