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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: bart13 who wrote (94241)5/14/2008 5:29:50 PM
From: John Vosilla  Read Replies (1) of 110194
 
'You can clearly see that after Fed Chairman Paul Volker choked off inflation by causing the worst recession since the 1930s, in 1981-2, it has remained under 5% a year for almost the entire 25 years since. But notice that here we are, almost certainly at or near the trough in this 1946-2003? (low to low) or 1981 - 2040? (peak to peak) Kondratieff cycle, and again the inflation rate (currently at 4.3%) exceeds long term rates, at least as measured by the 10 year bond.

Imagine what a 1946-style 20% inflationary spike would do now, with wage growth for the median American stuck at about 3% a year, and interest rates on CDs and bonds in the 4% range? Given what is happening to the dollar, to the price of oil and foodstuffs, and the inflationary impact of the Iraq war in particular, another inflationary burst marking the exact midpoint in the interest rate cycle cannot be discounted.'

dailykos.com
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