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

To: Perspective who wrote (67870)	8/10/2006 4:06:07 AM
From: shades	Respond to of 110194

Exactly how does one profit from rising labor costs, the lagged effect of commodity price increases? Well, unless you're selling labor, you're pretty well hosed. Wrong - my grandpa and grandma had lots of babies and made them work for FREE on the farm so they didn't have to go to publix and buy expensive milk or cheese or fresh fruits or vegetables or bacon - My grandpa had a very small house on a big lot of land in the country - he didn't have that flashy 1930 model A ford or argon filled windows - but the mish's of his day were not eating NEARLY the quality or quantity of food that grandpa had from all that free child labor - they FEASTED at grandpas house! Grandpa was smart and got land next to a nice flowing river - who needs to refigerate milk when you can just store it in the cool river? My mom showed me the spot - they had this little patch of stonework at the edge of the river they would put thier milk containers in - kept the milk nice and cool until time to drink.

To: Perspective who wrote (67870)	8/10/2006 9:03:31 AM
From: Tommaso	Respond to of 110194

Actually the word "interest" did not appear in my post. I agree with you, however, about bonds--even about the unwisdom of shorting them. But since the only way that a central bank has to give value to its fiat currency is to raise interest rates, inflation does lead to higher interest rates. Also, savers have to be paid more to keep their assets in a depreciating currency. In the last hundred and forty years, the United States has only had one protracted period in which that happened: about 1972 to about 1982. But we have only had a totally fiat currency since about 1972. I expect to see another cycle of inflation, culminating in another cycle of very high interest rates. But the only way in which I am making any sort of bet on interest rates is to keep my most liquid savings in 4-week T-bills via TreasuryDirect. If and when interest rates rise, they will track the rate right on up. Indeed, right this minute you get a better rate on 4-week bills than on 30-year bonds.