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Strategies & Market Trends : SiliconInvestor All Stars Forum

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To: John Vosilla who wrote (1438)	10/4/2007 3:35:46 PM
From: Mike Johnston	Read Replies (2) of 1718

I have been waiting for higher rates too. But it is not happening due to Central Bank intervention in the bond market. Unusually low rates are and will be the drivers of inflation and in the future possibly hyperinflation. With 14% and rising ( possibly pushing high teens after last round of CB activism )annual monetary inflation and price inflation close to 10%, long term rates should be at least a double current level, in order to reflect true level of inflation in the economy. This grand experiment in business cycle and market management will end very badly, but we could be as long as 5 years away from the final collapse. In this environment the only certainty is that the prices of gold and commodities will continue to rise and standards of living will plummet, especially for those earning dollars. I don't know what will happen to stocks or bonds, but most likely stocks will be higher. Bonds could be flat for years, but the bondholders will eventually lose most of their investment due to very high inflation.

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