Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: AC Flyer who wrote (39774)	10/18/2003 2:37:56 PM
From: smolejv@gmx.net	Read Replies (1) of 74559

Hi AC: just musing ... in any case not picking a fight, OK;? >>the fact that J6P can get a 5% 30 year mortgage is not his doing - it's the rational work of the private sector<< I'm somehow used to the idea separation of duties, with the central bank creating / controlling the creation of money, and financial (your private) sector getting paid to do the rest. This just does not seem to have been the case with GSEs creating money out of thin air, putting some lipstick on it and selling it. How much could Fed do (or was ready to do)... I probably sound like an old record, but besides stepping on the rates with both feet and finding some reasons for doing it, not much - of course, I admit here the inherent chicken and egg problem... but the image of the Wizard of Oz un-curtained toward the end of the movie is floating in my mind. Somewhere at the bottom of some spreadsheet in my head low interest rates mean to me no incentive to save, mean low risks, mean either some thermodynamic winter like Japan or yet another round of carry-trade- or debt-based bubbles... Low rates have a feel like a cut on the insurance policy ("you'll be paying just half of what you used to and we'll add your two youngsters at N/C as well"). End of rambling RegZ dj

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