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

To: ild who wrote (3602)	12/18/2003 2:12:56 PM
From: ild	Read Replies (2) \| Respond to of 110194

Date: Thu Dec 18 2003 13:56 trotsky (Hambone@'where to from here') ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved Fed Funds close to zero is my guess...also, very likely new mutli-decade lows in longer dated yields eventually. the FF rate at 1% is NOT 'low' if we enter a pronounced deflation. if e.g. an unadjusted CPI measure ( Cleveland Fed CPI for instance ) were to decline by 2% per annum ( not an unreasonable expectation imo ) , 1% nominal yield would amount to 3% real yield - quite high for the FF rate. nevertheless, the argument that the Fed is 'running out of ammunition' is quite valid. similar to the BoJ, it will really be in trouble once the FF rate is at zero. anyway, who cares? unless you're an idiot and up to your neck in debt, deflation can only be good for you. your money will buy more goods and services in the future, imo a reason to celebrate. one can also hope that central banks will go back into the ether where they belong once their money system falls into disrepair. an opportunity to return to honest ( non-governemnt ) money may arise. btw., i still think that gold will do well in a deflation - although it will probably suffer a corrective decline at its onset ( i.e. when it becomes widely recognized that the 'reflation' episode is over ) , due to all those bailing out who bought it in expectation of INflation. later on, the fear that the fiat system might go down in flames should drive the PoG.