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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (58518)4/17/2006 8:45:08 PM
From: bond_bubble  Read Replies (1) of 110194
 
I dont think Fed will do that. The primary reason why inflation is bad is NOT because foreigners will dump the currency (you are seeing all the countries loving to drop their currency value in order to export to US and US is wanting Yuan to appreciate etc). The reason why inflation is bad is because, as the cost increases (PPI), people start losing jobs and the economic malaise sets in. I think Fed has to fight that economic malaise and only way that can be done is to raise interest rates and they need a reason to raise rates which is to leave the CPI as is!! If the CPI was tailored to show low values, and decrease the interest rates, people will be losing more jobs as PPI will soar [currency could fail merely because of yield differential]. I think, irrespective of whether govt publishes CPI or NOT (or massage some number into CPI), the economic reality of job losses due to higher PPI will happen. This is what I believe Fed is trying to fight (the job losses).
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