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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Seeker of Truth who wrote (49644)	5/7/2004 12:11:58 PM
From: energyplay	Read Replies (2) \| Respond to of 74559

Short term and right now, looks like cash is doing better than tech, gold, metals, China, long term bonds, and very likely energy. I am moving to more cash....a little late, of course.

To: Seeker of Truth who wrote (49644)	5/7/2004 6:28:21 PM
From: Taikun	Respond to of 74559

Nominal rates are 1% for Fed Funds with the longer Treasuries in the 4% range, so subtracting the fuzzy CPI of 2-3% gives a net 1-2%. But, ask any pensioner if they can meet the rising costs of energy and medical cost inflation by investing in Treasuries? Well, they can't. Since the components of the CPI that gave us an honest number have been stripped out, to protect the insurers, and their CPI-indexed annuities, Social Security, with its CPI-indexed pension targets, and corporate CPI-indexed pension funds (which companies gladly dipped into in the 2000-2002 selloff, with the gov'ts blessing), the CPI is a joke. Many unavoidable expenses are not in the CPI. The CPI should be much more than 2 or 3%, if it were to be 5-7% (very conservative) then real interest rates would still be negative. Principal, life savings are all being eroded by this fuzzy CPI. The overnight rate is too low, and rates are too low. Assets that rely on borrowed money (homes, margined accounts at brokerages) inflate, as we have today. The deflation is in fuzzy CPI-indexed instruments that pensioners rely on. Even the TIPS is a joke. That is why assets inflated with these unreasonably low rates. The poor pensioners. The problem is, they've lost their chance to raise rates and dig down and really fix the problem. Now they might not be able to raise rates and dropping rates won't spur growth. Look at Japan.