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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (12643)4/26/2004 12:54:42 PM
From: Wyätt Gwyön  Read Replies (1) of 110194
 
"tighten lite",

the thing is, as Bianco noted, they are so far from an equilibrium rate, they could be perceived as being "aggressive" simply by going to 2% or 3%. perceptually, this might seem "extreme" but it is not at all extreme in terms of US cash rate historically (4.1% average for the 20th century), nor for the current environment.

so because they have "defined deviancy downward", they can appear "tough" even as they continue essentially accommodative policy. kind of like a school teacher today seems tough for wagging a finger at a kid who's cussing in class, whereas 50 years ago the kid would've been smacked upside the head.

btw, the latest issue of Grant's had an absolutely fabulous discussion of these issues. reading Fleck is like slurping the dregs after reading Grant. i'm pretty sure Fleck would agree--and i don't mean that as a diss against Fleck.
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