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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: ild who wrote (2614)6/24/2003 12:29:47 PM
From: Perspective  Read Replies (1) of 4904
 
Once this little surge in the economy due to refis and tax cuts plays out, we'll face yet another deflation scare if my read is right. With the Fed signaling nervousness about the unconventional measures, (and they should be nervous) they will wait until the last possible moment to cut rates again. Of course, they think it's best to be "pre-emptive" and try to foster inflation, when what they should be focused on is a pre-emptive attack on the supply/demand gap. This would require tough love on the economic front, and risking a little deflation now to avoid an uncontrolled deflation in the future.

Won't happen though; too politically distasteful. Fed will waste all its liquidity options without permitting any rebalancing, and then it will all happen in a sharp, violent correction.

BC
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