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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (5739)1/22/2004 3:35:58 AM
From: eddieww  Read Replies (1) of 110194
 
"There is NOT inflation where the FED wants it."

Well Mike, there is massive inflation in the 2 places the FED wants inflation most: real estate and stock market prices.

All of the worldwide overdemand, bottlenecks, and shortages that Russ worries about, with the possible exception of food (weather related supply deficiencies) will go away in a hurry if deflation in the stock and housing markets happens here. The entire growth of the world GDP depends upon the willingness of the US consumer continuing to borrow and spend beyond his/her means. Roach, over at MorganStanley claims 96% of world GDP growth since 1995 has been to feed the "appetites" of american consumers. That's the reason I agree with you that the FED won't and can't do anything but try to keep the longer end of the yield curve from rising. In fact, they must jawbone until their lips turn blue to try to undo the damage from last summer and reflate the re-fi bubble. So far, so good.
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