William/Mike B
Oops, the cpi came in above expected. Look for "permanent reserves" and coupon passing by easy AG, to pick up the lack of buying. Oh yes, and I almost forgot, look for us to explain it away as well it was this and that item you know, the ones that compose the basket but we would like to single out and ignore this time...blah blah blah.
Good thing, we can sucker Japan & the rest of the world into thinking weak currencies are good for their economy. Otherwise, might be difficult for us to float all this debt. You have to believe that at some point, we will need to inflate the dollar away as most of the debt will be in the hands of foreign entities. Its kind of good that we are the reserve currency of the world, selling dollars to anyone and everyone in exchange for iou's. Since our fed responds first and foremost to our economy (in theory), they will take whatever action is neccessary to protect our economy no matter what it does to the "reserve us dollars" held by foreign entities. So look for inflation spike, followed by short term reduction of interest rates to low values as we attempt to monetarize our way out of the inevitable credit bust.
Agree / Disagree and why thanks
Oh yes, and one more thing. Lets see, 0.7% cpi * 12 = 8.4% seems as if you would have to be an idiot to hold 5, 10 and 30 year bonds paying a miserly 5.8% in this kind of environment. Good thing I dont hold any bond funds. And probably wont until the demand for bond issuance dries up. |
