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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (1347)3/5/2004 5:18:13 PM
From: KyrosL  Read Replies (2) of 116555
 
A flat yield curve where short rates are 3 (Roach's advice) means that long rates will be 3 too, which is a lot lower than they are now, so refi will be alive and much healthier than now, which does not jive with your depression scenario.

The theory is that the Fed lowers short rates to stimulate investment. But we all know that in this cycle this theory fell flat on its face -- cause the world's problem is overinvestment, and cause whatever investment there is takes place in the emerging low wage economies. So it's not clear to me how jacking up short rates from to 1% to 3% will hurt the real economy.
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