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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: TH who wrote (6136)5/11/2004 5:57:24 PM
From: yard_man  Read Replies (2) of 116555
 
I'm not sure this part makes sense ...

>>It is now very interesting to see the further monetary picture to develop. As it takes usually very long for an asset bubble to deflate (Japan !!), it is likely that the current environment for low FED Funds persists much longer as many observers can think of. Should the FED raise interest rates anyway, the situation would become actually much worse as then long term interests rise higher and depress M3 growth even more<<

if short rates are raised it should calm the bond market and bring lower long term rates, no??

but he is right on the first part there, I think -- low Fed funds rate will persist for much longer than many think. If we do get a raise -- it will be undone, shortly thereafter -- and accompanied by a liquidity POUR.
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