Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Stcgg who wrote (7899)	8/28/2001 11:50:47 PM
From: Oblomov	Read Replies (2) of 74559

>>A dreaded inflationary depression and market collapse destroys the accumulated wealth of the people. A deflationary bust seems to be occurring. Where is the evidence of inflation? The dollar has fallen from its highs, but it is still well above where it was in April. It has hardly "plunged". In any case, as the yield on short-term TIPs indicates (1.6%), real rates are still well in positive territory, and are well above where they were in 1992-3 when the Fed stimulated the economy by lowering real rates to zero. It's as if the Fed can't lower rates fast enough... Meanwhile, the Senior Loan Officer surveys for new corporate borrowing trends are at all-time lows, lower even than they were at the nadir of the last recession. Banks are well-capitalized (for now) and willing to lend, but corporations do not want to borrow. These are not signs of inflation.

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