Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: ild who wrote (22552)	12/2/2002 12:39:16 PM
From: isopatch	Read Replies (2) of 36161

Another key driver of higher energy prices (AWA gold and other commodities), in the longer term, is a FED moving to monetize intermediate & long maturity debt to hold down interest rates. Don't see how they can avoid doing so because the US gov has to hang tons of new paper to pay for an Iraq war AND....huge increase in expenditures on homeland insecurity that will only go higher still, IMHO. Monetization will, of course, devalue the clown buck. So how many years will that take before the Persian Gulf oil producers demand payment in gold dinars instead of dollars?! Methinkin' 1 or 2 years at the outside. However, as we've seen repeatedly during his tenure as FED Chariman, Green Queen is notoriously slow with the trigger finger. But look at recent action in the 10 yr tsy below. If they're going to start buying the key 10 yr tsy, to hold down interest rates, he better get off his butt SOON!!! Rates bottomed in October and are now ramping. finance.yahoo.com^tnx&d=c&t=1y So far, all I see is continued liquidity injections in the short end. app.ny.frb.org That's just not going to cut it with a mountain of new Treasury paper in the pipeline. Tic toc. Isopatch

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