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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (75239)	4/14/2007 2:39:40 PM
From: Real Man	Respond to of 94695

The Fed kept the rates way too low, dropped them vigorously to contain the dot-com and telecom bubble pop. They kept the rates extremely low, then raised in baby steps, while printing under the table. That was what tanked the dollar so far. The Fed only controls directly the short-term rates. If the Fed's credibility is undermined, the lies about inflation are discovered, then the currency and the bond markets can take the matter into their own hands, and require much higher premiums (rates) for USD longer-term bonds due to high currency risk. Short rates will stay low, unless the Fed raises. If it does raise, that would limit the damage to the dollar. So far nothing of that sort happened. The bond vigilantes of the 80-s are long dead. The bond market is extremely overpriced. While stocks remain reasonably priced relative to bonds right now, at much higher 10-year rates it would be a totally different story.