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Strategies & Market Trends : The coming US dollar crisis
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To: Archie Meeties who wrote (3311)1/14/2008 12:47:44 PM
From: Real Man  Read Replies (1) of 71454
 
I guess it anticipates official inflation numbers rather than
actual inflation. IMHO the reason is that these markets are
now mostly derivative markets, and models for derivatives
have official inflation numbers priced in. Those differ from
the actual numbers, as many folks who shop can easily see.
For example, TIPS vs T-bonds futures, which often extract
"inflation", rather reflect the market's anticipation of the
next BLS number. Since official inflation numbers are a joke,
the derivatives market built on lies can't last forever, and
some day we'll have a deep crisis. Kind of similar
to "subprime" before the crisis hit - that market was based
on fake credit ratings from major US credit rating agencies,
so it was a matter of time before stuff hit the fan. The
party lasted for quite some time though.
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