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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (22999)12/7/2004 1:52:05 PM
From: ild  Read Replies (3) of 110194
 
My take: stagnant wages, lower disposable income because of inflation in consumables spell trouble for houses, autos and other durables.
Message 20835036

Facing economic weakness the Fed will be cutting rates. The problem is they are mostly out of bullets, but they still can cut 2%. -g- Since we are "asset based society" falling asset prices will start self feeding asset deflation.

In other words 4% fed funds are just not possible. With the whole US economy so leveraged on low fed funds even 2% FF are high. I see some fugly variant of Japanese scenario: fed prints at will (this is the only thing they can do) but asset prices continue sliding.
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