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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: gregor_us who wrote (12944)4/30/2004 1:20:06 PM
From: russwinter  Read Replies (3) of 110194
 
No, I believe rate hikes (not token) WILL quiet this inflation. I've used the term F3IP (Fed's Fully Funded Inflation Program). F3IP fuels excessive US consumer demand, misallocates capital, maladjusts the world economy by hyperstimulating China, who in turns engages in dangerous "wildcat expansion". China can't do this alone, they need the US to choke off runaway consumerism. Further, low interest rates encourages all kind of carry trades, including speculative buying of commodities. On the later, "talk" will only cool this later briefly. The hedge funds will engage in this trade as long as rates are one percent.

<real inflation we are seeing in prices, is not being driven by US wage and Job Growth?>

As I've said repeatedly, it's driven by credit expansion, wages being secondary. The ratio has been 7.4 to 1.
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