Mish's Global Economic Trend Analysis Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: zonder who wrote (17531)	12/3/2004 12:09:08 PM
From: mishedlo	Read Replies (1) of 116555

Interest rates are not a tool to boost employment. If you look at a table of interest rates and unemployment through time, you will be amazed at the lack of correlation between the two. Rates are an efficient tool to control INFLATION, however. That is why Fed is nudging them up slowly, towards neutral. There is nothing bizarre about this, Mish. Here we go again. OK we had a huge blowup in the PPI. Raising interest rates is NOT going to solve the problems of peak oil and increasing demand in India, China, and Brazil. Nor will it solve increasing demand for Steel etc in India, China, and Brazil. That is my position and it is not going to change. I will not be shocked if they raise in Dec. Not at all. What I am shocked by is that 4 hikes have not slowed consumer spending (yet). In that regard I expect the Fed to keep hiking. We have a serious disagrement however over continued hikes. You keep failing to understand the LAGGING nature of rate hikes. They take TIME before they take affect. All of your analysis fails to take this into consideration. There is ZERO doubt, none, nadda, that deflation is going to come roaring back when housing slumps. The signs of a housing stall are aparent. We will see if another rate hike does it. It took 5 in the UK to do it, perhaps 5 will do it here. Note that consumer spending is showing serious cracks this holiday season. Have you heard Yellen and some other FED members recently? They are getting quite nervous and hinting that they will be looking closely at data. They are suggesting a possible pause. So is Paul Kasriel at Norther Trust. His column should be a doozy this afternoon! In addition, the PPI is likley to be crashing next month. My guess CPI too. Will I hear Zonder calling for pause? I doubt it. I believe the neutral rate to be about where we are. I can not prove it to you and you will probably never believe it. Long term I believe rates have only one way to go: down. Mish

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next