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

To: mishedlo who wrote (5739)	1/22/2004 3:35:58 AM
From: eddieww	Read Replies (1) \| Respond to of 110194

"There is NOT inflation where the FED wants it." Well Mike, there is massive inflation in the 2 places the FED wants inflation most: real estate and stock market prices. All of the worldwide overdemand, bottlenecks, and shortages that Russ worries about, with the possible exception of food (weather related supply deficiencies) will go away in a hurry if deflation in the stock and housing markets happens here. The entire growth of the world GDP depends upon the willingness of the US consumer continuing to borrow and spend beyond his/her means. Roach, over at MorganStanley claims 96% of world GDP growth since 1995 has been to feed the "appetites" of american consumers. That's the reason I agree with you that the FED won't and can't do anything but try to keep the longer end of the yield curve from rising. In fact, they must jawbone until their lips turn blue to try to undo the damage from last summer and reflate the re-fi bubble. So far, so good.

To: mishedlo who wrote (5739)	1/22/2004 9:10:41 AM
From: russwinter	Read Replies (3) \| Respond to of 110194

<That is exactly where Russ's argument goes to hell.> Couldn't disagree more. The job of a good CB, is to assure price stability. They can't pick and choose their inflation. Nor can they export it back to places like China and expect to get away with it. A component of the inflation I've been describing is supply related. Even so the supply problems arise because the market is so distorted now. But a large measure of current input cost inflation is demand driven (and weak USD driven), and results from the Fed leading the way with easy money. Message 19705645 And now it has a speculative, hoarding component, again caused by low rates. Low rates encourage commodity and anti-USD currency carry trades. Message 19706511 <WTF would 8% do?> If it gets bad enough, 8% might be applied, but that's not what I'm calling for today. If I were the CB, I'd be heading for 3% FF fairly quickly though. <there is indeed inflation in SOME things.. Some? I'd say just about every input item I can locate. It's getting pernicious.