Inflation and Interest Rates Message Board

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Strategies & Market Trends : Inflation and Interest Rates

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To: Mr. Miller who wrote (27)	3/8/2001 3:11:55 PM
From: Wayners	of 35

Great call. As you can see from comparing the Fed Funds rate with the 30 Year bond yield, ole Grenspan ran the Fed Funds above the 30 Year bond yield. Can't get any tighter than that. Greenie of course was chasing inflation that bond market had already started to realize wasnt' there. the 30 year bond yield had already peaked off the top of its downward yield channel yet Greenie went right ahead and raised the Fed funds rate anyways instead of following the 30 year bond market like he should have been doing. Now you can see the mess the economy is in. Greenie made the same mistakes back in 1990 and 1998. Feds never learn. There ought to simply be a law that sets the Fed funds target at a constant spread from the 30 year bond yield. I think it would make the economy a lot less cyclical.

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