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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01

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To: Bucky Katt who wrote (9475)8/22/2001 1:20:49 PM
From: James Strauss  Read Replies (1) of 13094
 
It also keeps interest rates friendly for people wanting to buy homes... Jim, the only problem is that the "real"rate of interest is quite high, historically speaking. I have mentioned this from time to time in the past, but most people don't get it...

William:

I've always calculated the real rate of interest by comparing the CPI year to year % chg to get the inflation rate... Then I compare the inflation rate with the current Fed Funds rate... Right now the inflation rate is running about 3.2%... The Fed Funds rate is now 3.5%... This means to me that the real rate of return is a measly .3%... In other words, if you have $100.00 and you can earn $3.50 in interest but inflation eats away $3.20, you only have a .30 real return... This may sound like heresy, but when the Fed Funds rate was higher, people were actually getting better returns on their savings...

Jim

economagic.com
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