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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: John McCarthy who wrote (69985)9/19/2006 10:18:40 PM
From: bart13  Read Replies (2) of 110194
 
(a) the Fed cannot directly manipulate long term rates (and
I could be wrong)


Well, here's the record of the 10 year against the Fed's Securities Lending operation. Notice how the green line precedes rate increases and drops occur when the green line is low. A mild correlated pattern also exists with Fed custodials.

What do you think now?



(b) if announced inflation rates were allowed to rise
anywhere near 10% it would instantly give us problem(s) with:


Ah yes grasshopper... and the key is "announced". There are so many lies and so much fiddling in the CPI, and very few seem to be aware of the depth of the issues. Notice how much the Fed has been talking about "inflationary expectations" lately too - in my opinion, its just attempted misdirection.

My own fairly mild public page on the game:
nowandfutures.com

John Williams goes into much more depth on his site at shadowstats.com

why not (from the fed's point of view) allow a hit
to housing prices .... to within some range ....


Check Greenspan's speech at Jackson Hole in August of 2005, you'll find as clear as statement of that as you can ever expect from a central banker.

"If we can maintain an adequate degree of flexibility, some of America's economic imbalances, most notably the large current account deficit and the housing boom, can be rectified by adjustments in prices, interest rates, and exchange rates rather than through more-wrenching changes in output, incomes, and employment."
federalreserve.gov

When it comes to housing vs. the dollar, housing loses.
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