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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: yard_man who wrote (6642)1/31/2004 9:21:42 PM
From: russwinter  Read Replies (2) of 110194
 
Let's not confuse the issue. My point was primarily to refute the output gap theory that the Fed uses to justify one percent Fed Funds, not to say there is no capacity, or that everything energy intensive is obsolete. I have no idea what the excess capacity looks like now, but I'll wager a portion of it is either badly input constrained or just downright obsolete. I've posted several examples on this of late too.
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Message 19715574

And let's not confuse the issue about what it is we are debating; one percent fed funds, Repeat that, ONE PERCENT! It's also important to look at where the economy is TODAY, not in the future even assuming the iceberg risks both of us see are out there. You can't navigate for ice storms and icebergs, when there is a hurricane approaching on the radar screen. Ignore the hurricane and it will be the one that sinks you, even if the icebergs/blizzards are real enough. There is nothing going on now that justifies one percent FFs. That is beyond the pale under any historical standard. What exactly they should be is a guess but 1%, 1 1/2%, even 2%, ain't it, not with a hurricane closing in fast.
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