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

To: John McCarthy who wrote (69987)	9/20/2006 1:15:59 AM
From: bart13	Respond to of 110194

(a) Show me a 40 or 50 year graph that just compares (1) actual (announced) inflation levels vs (2) long term interest rates ...... if they don't move in the SAME direction I am wrong ... This one goes back to 1913 when the CPI started and do beware that in my opinion CPI is much higher than reported for the last 5-10 years. I introduced the word "announced" because I was trying to get clarity from what Mike wrote ..... if the thinking is that we're gonna have an announced rate of 3% inflation and a real rate of 10% then I don't know how this will square with higher wage increases as discussed in Mike's post ... I'm not certain (and I could be wrong) that we can disconnect wage increases from announced inflation rates You'll have to develop this further since I'm uncertain what you're driving at - I can be dense at times. Right now in my and John Williams and many others opinions, CPI is at least 4-5% understated. I hope you read my CPI page - it'll give you more background. Here's a couple of wage pictures that I hope may help: if I read you right (and I could be wrong) then you are suggesting that OTHERS have suggested the policy might be to let housing prices come down? Yes, very much so. if so - then why are we jumping thru all the hoops that Mike's post suggests .... I'm not sure again what you're driving at - I thought it was good recap myself even though I don't agree with it 100%. jmo - but the structure of Mike's plan really could take the pressure off the time-bomb .... i.e. this driving of long term rates down-ward to let current holders re-finance - its sharp I'm just trying to ferret out how the fed would engineer this .... lets not forget - the fed cannot (jmo) sit on inflation rates forever .... Indeed it could and probably will take pressure off a portion of the problem but the much bigger one of the dollar still remains. One thing I expect is more "toxic" deals to help "rescue" housing - perhaps something like a 40 year no doc interest only instrument that has some implied guarantee to the originator - if it gets bad. As far as how the Fed could do it (one possible way), and with tinfoil hat enabled, drop Seclend activities way back and if rates don't come down in a reasonable length of time, pound some more on both inflationary expectations and perhaps do liquidity subtractions so stocks fall and there's more of a "flight to safety".