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Strategies & Market Trends : Ride the Tiger with CD

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To: Condor who wrote (19442)	11/10/2004 3:47:39 PM
From: Bruce Robbins	Read Replies (2) of 313354

From Jim Turk's interview: smartmoney.com Q: How is that? A: The Fed is raising interest rates slowly. If they wanted to defend the dollar and keep commodity prices from going through the roof they have to protect the dollar's purchasing power. They would do that by raising interest rates more rapidly. That's what former Fed Chairman Paul Volcker did in the late 1970s. The Fed recognizes they can't raise interest rates because of the mountain of debt that confronts us. The economy wouldn't be able to handle the additional constraints placed on it that would result from higher rates. The Fed is allowing the dollar to go lower and as a consequence we are seeing higher oil prices and other higher commodity prices. The Fed has made that determination and that probably doesn't bode well for the dollar because the only way you save the dollar is through higher rates. IMVHO, the fact that the FED is ramping up rates tells me they are more worried about where inflation is headed than default on debt... EDIT What happened to that infamous quip by Bernake about printing as many $ as they had to? I thought this was going to be the strategy instead of raising rates. B

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