The Epic American Credit and Bond Bubble Laboratory 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 : The Epic American Credit and Bond Bubble Laboratory

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: GST who wrote (67779)	8/9/2006 2:21:57 PM
From: SouthFloridaGuy	Read Replies (3) of 110194

The Fed is not stupid. They would not cut rates into higher oil prices, especially since a lot of the move in oil is liquidity driven. What motivation would the Fed have to cut rates with inflation expectations running above target? The US requires foreign capital, thus rates HAVE to be higher here than anywhere else until demand slows enough to rectify the current account balance. The Fed will do its best to perform a fine balancing act, by devaluing the dollar and letting inflation run a little (not a lot) higher than target, but in the end a sharp recession(s) is imminent. There has never been a time where the Fed has cut rates INTO inflation. When they cut rates in 1975, they had already catalyzed a lot of pain by inverting the yield curve several hundred basis points, catalyzing a recession and consequently the cheapest market since the Depression. Inflation reared its ugly head again, but not because the Fed was purposefully trying to create it. I think you are mixing up being behind the curve versus going against it.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next