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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: GST who wrote (62972)6/7/2006 5:18:50 PM
From: gregor_us  Read Replies (3) of 110194
 
Is Bernanke a Hyper-Rationalist, Rather than a Hawk?

Does Bernanke think he is facing a textbook business cycle, and that by tightening further he strengthens the dollar, snuffs out inflation, and makes the landscape safe for T-Bonds?

Here's what I believe will be the Prize for further tightening from the FED 1. A weaker dollar. 2. Higher yields on T-Bonds.

All Ben gets from tightening further is a weaker economy which then Puts the Debt into play.

Once the Debt (the aggregate Public and private debt) is put in to play, it's all over. When the FED then goes to ease, the global market for T-Bonds will be hiking against him.

The only thing keeping up the dollar and T-Bonds is a moderately functioning US economy. It's musical chairs, but it works. It's a facade that make global holders of T-Bonds believe we can service the debt.

But Ben, the hyper-rationalist, thinks none of these issue are at work, and he can just hike himself into an Econ 101 late business cycle inflation?

One wonders.

LP
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