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

To: CalculatedRisk who wrote (9241)	3/2/2004 11:38:18 PM
From: NOW	Respond to of 110194

wish i could laugh about that: does seem to be on their mind, or as someone once said: "ME THINKS THE FED DOTH PROTEST TOO MUCH"

To: CalculatedRisk who wrote (9241)	3/3/2004 7:04:35 AM
From: Wyätt Gwyön	Respond to of 110194

sentence is critical: ... the incorrect view that low nominal interest rates necessarily signaled monetary ease. Get out the helicopters. Or bury bottles of money (as Keynes suggested). no, he has a point. even though the Fed eased 25 bp last year, in real terms short rates went UP from negative into slight positive territory, based on the core PCE deflator which is the Fed's favorite indicator. don't bother with the helicopters--just look at what happened to the Ms in the last half of last year and you'll see there were no takers. this reflects the higher real-rate environment which cannot be battled once nominal rates approach the zero point. a/k/a "pushing on a string". this is specifically what Bernanke means. of course, the deflationist argument is that he can do whatever the hell he wants and it won't make a difference.