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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: KyrosL who wrote (88000)10/27/2007 12:05:57 PM
From: John Vosilla  Read Replies (1) of 110194
 
'..the more dollars the Fed is creating, the lower the long bond interest rates will go, since all these dollars increase the demand for long bonds'

I remember that one from MacroEconomics 101..you can print dollars and monetize the back end to keep rates artificially low in the near term but inflationary pressures build down the road thus eventually raising rates higher. Now this was before supply side, endless deficit spending economics and the Laffer Curve became part of public policy in this country. We have no precedent to today as it appears all industrialized countries have no choice but mutually monetizing the back end of their curve in order to keep the dollar from depreciating faster..All this creates even more inflationary pressures worldwide on the back end of all this.
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