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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (2201)	11/15/2003 6:11:21 PM
From: mishedlo	Respond to of 110194

You miss the point I think. Greenspan will indeed keep rates down as long as he can. But we are approaching the point I think where the cost of continuing this policy will be greater than the benefits -- namely runaway inflation and the end of the dollar's role as an international reserve currency. Not missed at all. I understand the point fully, I just do not agree with it. Inflation is rising on commodities because China is sucking up every last resource. Thsy also had crop failures so this even spilled over into corn beans and wheat. Is raising interest rates going to cure that? How? Do you think raising interest rates will save the US$? How much will that take? Is it possible? Is the US dollar sinking because of deficits and balance of trade issues or interest rates or perhaps all three. Assuming it is all three is raising interest rates going to cure it? Study that last question carefully. Can we EVER attempt to compete with China regardless of how high our interest rates are. Personally I doubt it. In fact it is not doubt it is 100% guaranteed. China has labor costs about 1/30 of ours if not even less and no matter what we do we are not going to solve balance of trade issues. Since I think that is the BIGGEST problem with the US$, raising rates is NOT going to fix it alone. Finally, do you think the $ is forever going to stay the reserve currency even IF we raise interest rates? How high will they have to get? Is it practical for them to get that high? Look at russin oil. Going to be priced in Euros. Oil might get priced in Euros or Dinars or whatever by other countries as well. Going to happen. Inevitable. How do you stop it? Raising interest rates? haha how high? In short Greenspan's problems are likely insolvable and raiising interest rates sure is not going to cure them. It will KILL housing. Want another macro bet? Watch England raise rates exactly twice. Then watch them reverse after it T totally crushes housing over there. Then see if Greenspan even dares raise interest rates looking at that. M