Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (13837)	10/21/2004 11:48:27 PM
From: mishedlo	Respond to of 116555

"Neutral": Inflation is 2.5% to 3%. A neutral real rate would be 1.5% to 2%, and that gives 4% to 5%. If inflation was 2.5% a "neutral rate" would be 2.75-3.25 IMO Call me nuts but I think a neutral rate, given the slowdown and the stimulus cutoff is right were we are 1.75 or so. Heinz thinks we overshot already and that is my second choice. If the deceleration picks up 1.5 might be too high. The problem is that once again the FEd started hiking way way way too late. It should hve been hinking INTO Y2K. The rush to beat Y2K provided stimulus enough. I have not heard this analysis anywhere but I am convinced it is true. A hopeless overreaction worry by the FED. Right now, the FED could have easily hiked into these tax credits, tax cuts, and corporate tax giveaways. NO! It waited until the blowoff top in housing (where we were due for a stall anyway) to hike. Too late. Hike into a stall and you are adding dry ice to the chill. Greenspan will go down in history as the worst FED manager ever. Always wrong at the turns. Mish