Hi bentway; Re: "stocks are high because interest rates are LOW";
Congratulations! You found a typo!!! Good for you! I guess you were right all along, LOL.
Here, let me quote myself to you from our previous conversations:
December 11, 2013
I agree with the above, almost entirely. My only disagreement is that, over the long term, QE will cause inflation and that will most certainly *not* benefit the 1%. The reason the 1% are doing well now is because interest rate are low which causes asset prices to be high and the rich own the assets. But those low interest rates are not a permanent thing. Eventually the economy will recover, inflation will return, interest rates will rise, and asset prices will tumble. And since the 1% own the assets, their wealth will decrease.
Message 29275522
Also see:
I agree that a few assets are over priced. That would definitely include the dollar, long US bonds. And very low interest rate financial instruments that assume companies are going to pay them back are ridiculously expensive, given their risk.
But having these assets over priced is not a risk to the economy.
What will happen to these assets when inflation makes interest rates rise is the same thing that has happened a half dozen times in the last 100 years. Bonds will go down in value, LOL. This is no big deal. US bonds are not the economy. Bonds go up and down in price all the time and they've been doing it for most of 1000 years. It's like the climate. The lefties are all worried about a couple decades of warm weather and now you're all worried about a few years of low interest rates. Quit worrying about it. The economy is cyclic. If someone is telling you that they have a cure for the cyclicity of the economy just ignore them, they are clueless. The economy has huge positive feedbacks built into it and there is nothing anyone can do to stop the cycles. Not the government and not the Fed.
Message 29275513
-- Carl |
