Wage Deflation
The average salary of a US worker has dropped from $44,570 to $35,410 since 2001. This is clear wage deflation. In light of the FEDs emphasis on jobs and wages, I am and have been for some time of the opinion that the FED is not about to hike interest rates.
Much to do about nothing was made over the FED's changing "considerable period" to "patient" at the last FED meeting. Eurodollars (an interest rate play) initially plunged on that wording, as did the stock market and treasuries. Eurodollars have now gained back all of those losses and the FED has not made any references to rate hikes since then, including the recent congressional hearings with Greenspan.
My belief is that like it or not, regardless of where the US$ goes, how high gold or silver gets, that US interest rates are not headed significantly higher (if indeed higher at all) unless and until we see wage and job growth in the US. Given that I see nothing to stop the outsourcing of jobs in high paying fields to India and China, I believe that interest rates on a global basis have only one way to go: steady to down.
Discussion of this idea as it pertains to gold, silver, or copper, housing in the US, UK, Australia and/or any other idea or topic from the header is fair game.
Mish |
