Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (5377)	1/2/2002 12:46:15 PM
From: Yorikke	Read Replies (2) \| Respond to of 33421

Mrs. Peel, I believe Droke's article is a bit overdone, not to mention inaccurate in many respects. ' An extremely low rate of interest essentially proves that deflation has been underway for some time, for it reflects the falling demand for loans in the face of a shrinking money supply.' The money supply is NOT shrinking. It is in fact expanding at an unprecedented rate. There are other inaccuracies and rather 'hyped' statements that cause me to step back and question Mr. Droke's expertise. If you would like a more accurate and rational take on the same issues I would suggest that you look at the PrundentBear site and review their excellent ongoing analysis of the credit situation. Happy New Year.

To: MulhollandDrive who wrote (5377)	1/2/2002 2:14:05 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 33421

One other point about Mr. Droke's discussion of the collapse in bonds, Mrs. Peel. As I stated in a previous post, the Fed sells T-bills to sop up liquidity in the money supply. If Bonds are "crashing" it's quite likely due to the Fed stepping in and selling T-Bills to drain liquidity from the system as cash is redeployed back into other asset classes. Secondly, if there were an aversion to borrowing, we'd be see real rates (not just the Fed funds, and discount) rates continuing to decline. But that's not happening that I'm aware of. In fact, mortgage rates seem to have bottomed and are increasing again. Thus, the market is anticipating that the Fed has finished easing and is now back into a tightening mode (hopefully more gradual than before), and factoring in the likelihood that the Fed will be selling T-bills to drain liquity. Given the relatively small amount of T-bills it has to "work with" (due to the small public national debt in the US), when the Fed sells, it's creates ripples in the bond markets. Mr. Droke also seemingly ignores the fact that US Treasury bills were in a raging bull market over the past year and half, and GOOD LORD, they NEED to consolidate... Given the excesses in the treasury bond markets as the equities markets deflated, there has to be a return to some sanity. But it's NOT the end of the world as Mr. Droke would like to claim that it is. futures.tradingcharts.com (PS: Someone tell me if the chart above is currect, because that's just astounding!!) Hawk