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Gold/Mining/Energy : Gold Price Monitor
GDXJ 94.04+0.6%Nov 21 4:00 PM EST
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To: Don Lloyd who wrote (52725)5/14/2000 9:09:00 PM
From: Hawkmoon  Read Replies (3) of 116764
 
I still say that price stagnation is not what the Fed desires. To say otherwise we would see a Fed that consistently acts to makes prices decline, even if that means inducing a depression to cause price deflation.

As long as interest rates exceed inflation by a certain measure, the financial system guarantees that it will continue to profit on lending. It is when inflation exceeds interest rates that banks wind up lending out money only to be paid back in devalued curreny down the line.

But I do agree that rate hikes are an economic sledge hammer that punishes everyone, not just the abusers of the system. That's why I advocate better risk management measures on the part of lenders and continuing to reward those who are prudent in utilizing their credit efficiently.

And also, when the Fed has squeezed what they perceive as sufficient liquidity from the system, they will have to temporarily pump it back in until equilibrium is restored.

Regards,

Ron
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