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

To: GraceZ who wrote (45355)	11/13/2005 1:39:41 AM
From: John Vosilla	Respond to of 110194

"Are you lumping mortgage money in with consumer credit? .....I think it is fair to say, a lot of consumer credit has been replaced with mortgage borrowing because it is so cheap and easy to borrow money secured with RE." Yes and so well stated by you. Though values have risen in many areas the still lax underwriting and aggressive nature of institutions to push you to borrow money like never before this latest cycle occurred yet the yield curve has become flat of late is still the mystery..

To: GraceZ who wrote (45355)	11/13/2005 1:50:34 AM
From: ahhaha	Read Replies (1) \| Respond to of 110194

Look what else the guy said: The biggest mystery to me is how consumer credit has continued to expand at such a rapid pace since the middle of last year as the fed tightened, The FED "tightening" hasn't been a tightening. FED has only been taking back the overly generous negative real rate accommodation they had in place for three years. FED hasn't tightened since 1973. Be that as it may, FED tightening rarely affects consumer credit. It does when rates get so high that the economy is thrown into recession, but that is unlikely during this enlightened era of FED engineered perpetual prosperity. Even then, consumer credit only slows for precautionary reasons(the ability to pay), never for interest rate reasons(the ability to pay interest). the curve flattened The "curve" has no material consequence since there is no free market in money. FED absolutely fixes the cost of money and all market participants go along with this rate because there's no clear reason to take down money in a socialist society getting killed by Asian capitalists. I'm sure you get the demand angle here, but I'm also sure you're alone in that apperception. and money supply growth stalled.. Money supply growth is presently disconnected to the cost of money, mainly because there's still the remnant of supply regime in loanable funds even while loan demand rises. Also, the FED has preempted any such connection by its price fixing. Not that it makes much difference since it's against the law to make money in the US. Better to give final demand to Asians who deserve it rather than squander it on bums.