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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Proud Deplorable who wrote (90838)1/27/2008 10:01:52 AM
From: glenn_a  Read Replies (1) of 110194
 
Botox4U2.

(("Say "Hi" to hyperinflation!!!!" ...Lowering rates to keep the Dow over 12,000 ))

I'm not so sure that the Fed lowering the interest rate by 75 basis points is a sign of impending inflation. To me, it has more the feeling of an act of desperation to prevent the global credit system from unwinding.

That's what happens in a credit bust. There comes a time when lowering interest rates, even dramatically, achieves absolutely bupkis. It's the whole "pushing on a string" scenario.

I know this can be hard to fathom after the rampant credit growth and price inflation we've witnessed since the turn of the century. But K-wave credit contractions work in reverse, they suck credit out of the system just a surely as credit inflation buoyed all asset prices.

I believe the tide may be turning. Be careful out there.

Caveat: I could be wrong. :)

glenn
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